Because the investor isn't a Morgan Stanley customer, the firm has argued in a complaint filed in Manhattan federal court that the arbitration shouldn't proceed. It argues the investor, Uma Swaminathan of East Brunswick, N.J., ordered shares through Vanguard Financial, according to the report.
Swaminathan, meanwhile, has said the botched IPO has cost the investor $1.9 million in damages.
If Morgan Stanley is successful in getting arbitration dismissed, it could prevent other investors from seeking FINRA aid to resolve Facebook legal disputes. That could result in expensive, lengthy court cases to settle complaints. For some investors, such a cost could be too high.
Facebook's IPO was one of the most highly anticipated offerings, with many people clamoring to buy shares of the social-networking giant. However, things quickly deteriorated, with Facebook's stock price dropping almost immediately. Investors who were excited early on have since become worried about Facebook's ability to make money and to address the spread of mobile.
Facebook and the various stock exchanges and banks involved with the IPO have faced numerous lawsuits since the offering launched in May.