Oh not illegal for sure. But they dropped the ball. Bankers are shielded from practically every type of litigation based on engagement letters. But that doesn't mean that they didn't fail their client. I mean practically speaking if bank A botched a deal for Facebook, not many large tech companies would be lining up to engage them. They can't hold their hands up and say well its your fault so boo hoo. If that was acceptable behaviour in the market, nobody would hire bankers. Having seen bankers roll out a deal on a company that later proved to be a complete fraud, believe me when I say that people get fired for messing up. Which should give you some idea of whether the bank itself thinks someone dropped the ball.

Also it sounds like he said she said on the all stock thing. The Bakers say bankers weren't around. Also any decent banker would be able to tell you to up your asking price to account for rolling hedging costs and/or other risks.