Citigroup Inc. fired Mark Mahaney, a senior technology analyst, according to a person with direct knowledge of the matter, as it settled a separate regulatory claim that a junior analyst disclosed confidential information before Facebook Inc.’s (FB) stock sale.
Mahaney, 46, wasn’t ousted because of the Facebook case, said the person, who asked not to be identified because the move was private. The analyst declined to comment when reached by mobile phone.
Citigroup agreed to pay a $2 million fine after a junior analyst e-mailed two employees at website TechCrunch.com seeking feedback on a Facebook document that contained a senior analyst’s view of investment risks and revenue estimates, Massachusetts Secretary of the Commonwealth William F. Galvin said Friday in a statement. As a part of Facebook’s underwriting syndicate, Citigroup Global Markets was barred from disseminating research until 40 days after the initial public offering, according to the statement.
“This penalty should serve as a warning to the industry as a whole,” Galvin said in the statement. “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 their personnel.”
A slump in Facebook’s stock after the May 18 offering has fueled shareholder complaints, regulatory probes and more than 40 lawsuits,
with some investors claiming the Menlo Park, California-based social-network company’s managers failed to revise forecasts before the IPO. New York-based Citigroup’s e- mail exchanges were provided to Galvin’s office on Sept. 14 in response to a subpoena, and the junior analyst was terminated about two weeks later, the watchdog said.
French Magazine
Separate from the Facebook incident, a senior analyst e- mailed unpublished information about Google Inc.’s YouTube revenue estimates to a French business magazine reporter on April 30, according to Galvin’s order, which didn’t identify the analyst.
A Citigroup communications employee told the senior analyst that he would need approval before answering the reporter’s questions, according to Galvin’s order. The senior analyst said he didn’t plan on responding, even though he’d already e-mailed answers to the reporter, the order said.
The e-mail on YouTube was sent days after the senior analyst had received a “Letter of Education” for failing to obtain company approval for a public appearance, according to the order, which didn’t specify whether the message broke securities rules.
Citigroup Faulted
The senior analyst mentioned in Galvin’s order was Mahaney, said the person familiar with the matter.
Galvin faulted the Citigroup subsidiary for failing to supervise its analysts. The firm settled, admitted to a statement of facts and pledged to abide by state securities laws, he said.
“We are pleased to have this matter resolved,” Sophia Stewart, a Citigroup spokeswoman, said in an e-mail. “We take our internal policies and procedures very seriously and have taken the appropriate actions.”
She confirmed that Mahaney was no longer at the firm as of today.
