We've already described how Kleiner Perkins, T. Rowe Price, and other big-name investors got burned in Zynga by investing in a late-stage pre-IPO private equity round.

Normally, these late-state private placements are like shooting fish in a barrel: You get a sweetheart deal on some preferred stock just months before the IPO is sold to less-discriminating investors in the public market who usually pay a lot more for it.

Alas, in Zynga's case, the play backfired. The company's growth flatlined shortly after the private deal, and the late-stage investors got burned on the preferred-to-common share conversion and price decline.

We knew the late-stage deal investors included "Morgan Stanley." What we hadn't realized was this Morgan Stanley was actually Morgan Stanley's mutual fund clients--a.k.a., mom and pop. (Thanks to Andrew Ross Sorkin for pointing this out.)

On behalf of these folks, Morgan Stanley's mutual funds bought $75 million of Zynga stock at $14 per share in the late-stage round.

Now that stock is worth about $9 per share.

Sorry, mom and pop.

Meanwhile, Morgan Stanley itself cashed in twice: First, presumably, on the private-placement fees for the late-stage round (assuming there were fees), and second, definitely, on the IPO underwriting fees.

Well done, Morgan Stanley!

SEE ALSO: The Only Reason Zynga's IPO "Flopped" Is Because Idiot Investors Paid Too Much For It

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See Also:

• INSIDE ZYNGA: Meet The Man Charged With Helping The Company Grow Up
• Meet The Most Powerful People Behind The Largest Tech IPO Since Google
• BRUTAL: Zynga Already Crashed Below Its $10 IPO Price