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Citigroup fined US$2 million over Facebook IPO leak, fires analysts

BOSTON/SAN FRANCISCO--Citigroup fired its top Internet analyst, Mark Mahaney, and paid a US$2 million fine to a Massachusetts regulator to settle charges that the bank improperly disclosed research on Facebook IPO and information on other tech companies.

It was the first formal charge involving an underwriter's disclosure of sensitive financial information ahead of the social media company's US$16 billion initial public offering in May.

In the Citi case, a junior analyst working for Mahaney emailed some research to journalists at the Techcrunch news website, who published some of the information in a blog post, according to the Massachusetts complaint released on Friday. The state's top securities regulator, William Galvin, charged Citigroup Global Markets Inc. with breaking Massachusetts securities laws that prohibit analysts at underwriting firms from sending “written research or other written content” until 40 days after Facebook's IPO.

Citi fired Mahaney and the junior analyst, and said it was pleased that the matter with Massachusetts has been resolved.

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