The state of Massachusetts fined Citigroup $2 million after finding that one of the company’s junior analysts improperly disclosed confidential information prior to Facebook’s May 18 initial public offering, according to reports.
Bloomberg reported that the analyst emailed two TechCrunch employees weeks prior to the IPO, seeking feedback on a document from Facebook that featured a senior analyst’s view of investment risks and revenue estimates. Citigroup and the other underwriters were barred from disseminating research until 40 days after the IPO.
Massachusetts Secretary of the Commonwealth William F. Galvin said, as reported by Bloomberg:
This penalty should serve as a warning to the industry as a whole. It is essential in these times of rapid and diffuse means of communications that financial institutions be vigilant to ensure that the rules on IPOs are observed by all of their personnel.
Galvin said his office received the email exchanges between the junior analyst and TechCrunch Sept. 14, following a subpoena, and the junior analyst was terminated later that month, according to Bloomberg.