Facebook IPO costs Citigroup
NEW YORK – Citigroup has paid a $2 million fine and fired a junior analyst after the employee leaked confidential information about Facebook’s initial public offering to a popular tech blog.
The charges were brought by the top securities regulator in Massachusetts, who has a history of aggressive enforcement actions against banks. The regulator, Secretary of the Commonwealth William Galvin, announced the charges Friday. Citi agreed to the settlement and admitted to the events detailed in the consent order.
Citi was part of the team of banks that helped underwrite the deal that made Facebook a public company in May. When a bank helps underwrite such a deal, it has information about a company that the broader investing public does not have. The bankers who underwrite the deal are not supposed to act on that information or share it with any favored clients because it would give them an unfair advantage over the public.
According to Galvin’s office, a junior analyst in Citigroup’s San Francisco office sent an email to two employees at the website TechCrunch.com with proprietary information about Citigroup’s research on Facebook.
Citigroup fired the junior analyst in late September.
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