Facebook Inc., the world's largest social-networking company,could be exposed to legal challenges surrounding its initial publicoffering similar to those faced by Morgan Stanley, according tolegal experts.

In the first regulatory claims to flow from the May 17 IPO,Massachusetts officials said on Dec. 17 that they fined MorganStanley $5 million for letting its investment bankers provideresearch analysts specific revenue information that was notdisclosed by Facebook to the general public. That broke adecade-old rule enacted after the dot-com crash to block bankersfrom influencing analysts, Massachusetts said.

The settlement includes for the first time details of theclosed-door conversations between Morgan Stanley and Facebook aheadof the IPO, including testimony from Michael Grimes, who led thedeal for the bank. According to the consent order, Grimes wrote ascript for Facebook's then-treasurer to read to analysts thatdetailed Facebook's lowered revenue estimates.