Massachusetts' top securities regulator has subpoenaed Morgan Stanley related to allegations that it gave some clients negative information about Facebook before last week's initial public offering.
In a statement Tuesday, Secretary of the Commonwealth William Galvin said his office is investigating whether Morgan Stanley selectively divulged to some clients that its analyst had cut his revenue estimate for Facebook. Morgan Stanley was the lead underwriter for Facebook's IPO.
The analyst's revision followed an amended filing by Facebook in which the company said a shift by many Facebook users toward mobile devices might limit its revenue growth.
Facebook's stock slid further Tuesday on its third trading day, dropping 9 percent to $31. The social networking company has fizzled since its long-awaited public offering last week at $38.
Rick Ketchum, head of the Financial Industry Regulatory Authority, said that if the allegations against Morgan Stanley are true, it would be "a matter of regulatory concern" to FINRA and the Securities and Exchange Commission.
FINRA is the securities industry's self-policing organization.
If Morgan Stanley gave revised information on Facebook to favored clients, it would mean retail customers and others weren't able to benefit from the same information before Facebook went public.
SEC spokesman John Nester declined to comment.