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Passersby walk in front of a Citibank branch in New York, October 16, 2012.KEITH BEDFORD/Reuters

Massachusetts fined Citigroup $2-million (U.S.) to settle charges that two bank analysts improperly released confidential information about Facebook Inc.'s financials before the technology company went public.

Citi said its top Internet analyst, Mark Mahaney, who was involved in the Facebook matter, is no longer at the company. It also terminated a junior analyst he supervised.

William Galving, Massachusetts's top securities regulator, said his office charged Citigroup Global Markets Inc. with breaking state securities laws when Mr. Mahaney, the senior analyst, failed to supervise the junior analyst and when he himself passed on information improperly.

According to the complaint, Citi's junior analyst sent some of the bank's confidential views on investment risks and revenue estimates for Facebook to two employees at, a technology focused media company, three weeks before Facebook went public on May 18.

The state said Mr. Mahaney also improperly gave information about YouTube to a French journalist.

Citi said it was pleased that the matter with Massachusetts has been resolved. "We take our internal policies and procedures very seriously and have taken the appropriate action," it said.

Mr. Galvin said Citi's analysts broke securities laws that prohibited them from sending "written research or other written content" until 40 days after Facebook's IPO.

Citi was one of the underwriters for the $16-billion IPO, the biggest ever for a technology company, along with Morgan Stanley, which acted as lead underwriter.

The Massachusetts fine is a relatively small amount for Citi, the third-largest U.S. bank, it sheds fresh light on Facebook's bungled listing.

Morgan Stanley, the IPO's top underwriter, also told select clients via telephone before the listing that it was cutting revenue forecasts. Facebook's debut on Nasdaq was delayed and the market then flooded with shares, further unnerving investors.

According to Mr. Galvin, the junior analyst, who worked for San Francisco-based Mahaney, wrote: "That's just an outline that I put together," when he e-mailed He added that "it will eventually become our initiation report at 30-40 pages."

Facebook's shares this week had their best trading day ever after strong quarterly results. Mr. Mahaney had recently upgraded the stock to buy from neutral.

Mr. Mahaney is one of the most respected tech analysts on Wall Street and consistently received high marks in surveys of institutional investors. He came to Citi in 2005 from Galleon Group, the hedge fund led by Raj Rajaratnam, who was arrested in 2009 and later convicted in one of the biggest insider trading crack-downs in U.S. history.

With various regulators looking at the Facebook listing, Galvin is the first to come out with a fine. He has long had a reputation of being an aggressive regulator who has filed suit against Wall Street's top banks for securities law violations.

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