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Morgan Stanley Fined $5 Million by Massachusetts on Facebook IPO

Morgan Stanley’s handling of Facebook Inc.’s initial public offering, a deal that cost investors billions of dollars, broke a decade-old pledge to block investment bankers from influencing analysts, according to Massachusetts regulators, who fined the bank $5 million.

A senior Morgan Stanley banker wrote a script that Facebook’s then-treasurer used to update research analysts on the company’s revenue outlook before the IPO, according to a settlement document with Secretary of the Commonwealth William Galvin. He faulted Morgan Stanley for dishonesty, ethics violations and failing to supervise employees -- the first regulatory claims to stem from the bank’s handling of the deal.