Massachusetts Regulator Subpoenaed Facebook Banks

Securities division looks at role of underwriters, securities analysts in IPO.

Massachusetts Secretary of the Commonwealth William Galvin subpoenaed Citigroup Inc. along with Facebook Inc.’s lead underwriters Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co. in connection with the decline of Facebook’s share price following its initial public offering in May, his office said.

Citigroup was fined $2 million after a junior analyst improperly disclosed confidential information before Facebook Inc.’s IPO, Galvin’s office said yesterday.

Not at Bank

As of Friday, Mahaney was no longer at Citigroup, said the bank’s spokeswoman, Sophia Stewart. “We take our internal policies and procedures very seriously and have taken the appropriate actions,” she said in an e-mail.

Before Offering

Just days before the offering, Facebook officials privately told securities-firm analysts to lower earnings and profit estimates -- largely on the dearth of revenue from mobile users. A company disclosure on May 9 warned investors that users were growing faster than advertising delivered to users. The warning was widely reported by the media, so information was publicly available on Facebook’s reduced expectations, even if retail investors didn’t read it.

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