Morgan Stanley works on Facebook IPO orders: source

NEW YORK (Reuters) - Morgan Stanley's brokerage affiliate, Morgan Stanley Smith Barney, has a "large number" of market orders entered on Friday for Facebook shares that still have not been reconciled, according to an adviser at the firm.

The adviser, who is not allowed to talk to the media and who declined to be identified, received an email from Morgan Stanley Smith Barney sent to financial advisers right after Morgan Stanley Smith Barney's Monday morning meeting at 9 a.m. EDT (1300 GMT).

The brokerage, in which Citigroup also has a minority interest, is working to "reconcile" the issue manually, according to the email, which was sent around to advisers Monday morning.

A Morgan Stanley spokeswoman declined to comment. A call to Nasdaq OMX Group Inc, which trades Facebook shares, was not immediately returned.

On Friday, massive demand for the social networking giant's initial public offering, which set a trading volume record for U.S. market debuts, led to a 45-minute delay in the start of trading in the stock.

After the shares began trading, Nasdaq had problems confirming trade orders to investors, resulting in mass confusion over what trades had been executed.

"I heard a lot of brokers ranting and raving on Friday about this," said the adviser, who was still waiting for confirmation of one client's "sell" order for Facebook shares from Friday.

Nasdaq had all orders, executed or not, returned to member firms by 1:50 p.m. EDT on Friday, according to a trading alert issued by the exchange Monday morning.

Nasdaq also said on Monday it is changing its initial public offering trading procedures as a result of the glitches in Facebook's market debut.

Facebook shares were down 9 percent at $34.88 on Monday afternoon.

(Reporting By Jessica Toonkel; Editing by Gerald E. McCormick, Matthew Lewis and Steve Orlofsky)

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