This Facebook (FB) fiasco is a disgrace.

The idea that big clients were getting the skinny that estimates were too high, something that would justify immediately cancelling orders or dumping stock into the public frenzy, is just plain outrageous. Anyone who made such a call knew that was selective disclosure, a clear violation of SEC rules. Anyone who acted on it has to be subpoenaed immediately by the SEC to find out what happened. The repercussions should and must be severe, as such a number cut on the eve of the deal is something everyone had to know -- not just the big boys.

Is there any wonder that there was such a vacuum after the deal started? Anyone who wasn't able to scale back on the number cut got a once-in-a-lifetime opportunity to pick off the public at $42.

Heads, the insiders who were selling win; tails, they win. Heads, the big mutual fund clients who were selling win; tails, they win.

You got the chance to print money with that call.

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Who knows where the deal should have really been done knowing that cut. I can tell you this $38 would have been ludicrous unless you really just wanted to blast the unsuspecting public as well as the Morgan Stanley retail network, which was overwhelmed with stock it didn't want at the last minute, perhaps because of the new selective disclosure.

Making matters worse, of course, is that the smaller investors who got stock would most likely be selling through the wholesalers like Knight, and it appears that the Nasdaq glitch specifically hurt the people who decided to get out of the deal on the pop. I know the right of the flipper to flip isn't the most hallowed, but the big boys got the $42 price directly. It was the little guy who was disenfranchised if he got stock and tried to sell.

Oh, and those who actually bought on the deal? We now know that many didn't even learn they owned it before the stock was well below the offering. Those were the Monday sellers with the really late reports.

All of this stinks, of course, but none of it stinks more than the idea that the Morgan Stanley analyst cut numbers at the last minute and only the largest clients were informed.

If that's really the case, then the SEC has to go to Morgan Stanley on Wednesday and get all telephone records, all transcripts, all correspondence and start sifting, because there's no way this didn't violate the rules.

In all my years on Wall Street, this is the most outrageous and egregious deal I have ever seen.

Shameful.

And now someone has to pay.

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust, and has no positions in the stocks mentioned.