Citigroup fired its top Internet analyst, Mark Mahaney, and paid a US$2 million fine to a Massachusetts regulator to settle charges that the bank improperly disclosed research on Facebook Inc’s initial public offering (IPO) as well as information on other technology companies.
It was the first formal charge involving an underwriter’s disclosure of sensitive financial information ahead of the social media company’s US$16 billion IPO in May.
Lead underwriter Morgan Stanley has come under criticism for revealing revised Facebook Inc earnings and revenue forecasts to select clients on conference calls ahead of the IPO, leaving the rest of the investing public in the dark.
In the Citi case, a junior analyst working for Mahaney e-mailed research to journalists at the Techcrunch news Web site, who published some of the information in a blog post, according to the Massachusetts complaint released on Friday.
The state’s top securities regulator, William Galvin, charged Citigroup Global Markets Inc with breaking Massachusetts securities laws that prohibit analysts at underwriting firms from sending “written research or other written content” until 40 days after IPO.
He would not say how close his office might be to charging any other firms, or what kind of evidence they may have. Gavin said the Citi case was completed first because his office was able to obtain e-mails showing how the analysts broke the rules.
Some market participants questioned whether the Citi analysts’ actions were that bad and said that Mahaney has consistently received high marks in surveys of institutional investors.
Citi fired Mahaney and the junior analyst, and said it was pleased that the matter with Massachusetts has been resolved.
Galvin said he is still probing the other underwriters involved in Facebook Inc’s IPO, including Morgan Stanley, Goldman Sachs and JPMorgan Chase.
“Unfortunately, the message from this is that analysts should give less information to cover their behinds, but the smooth functioning of markets requires the exact opposite of this,” said Max Wolff, chief economist and senior analyst at research firm GreenCrest Capital.
“This is a move in the wrong direction,” he added.
Legal experts say it is unclear whether industry rules specifically prohibit brokerages from giving information to select groups of clients in a phone call, as Morgan Stanley did. So far, there has been no regulatory action against Morgan Stanley or any of its analysts.
According to the Massachusetts complaint, an unidentified junior analyst sent some of Citi’s confidential views on investment risks and revenue estimates for Facebook Inc to two employees of Web site TechCrunch.com, which is owned by AOL Inc, three weeks before Facebook Inc went public on May 18.
Mahaney failed to properly supervise this junior analyst, according to the Massachusetts complaint.
One of the most respected Internet analysts on Wall Street, Mahaney had previously been in trouble with his bosses for sharing information with journalists.
On April 11, Citi’s director of research for the Americas sent Mahaney a “letter of education,” noting that he had broken the bank’s rules when he spoke to journalists at Bloomberg and the New York Times without first obtaining legal approval, according to the complaint.
Only weeks after receiving that letter, Mahaney again broke Citi’s rules when he passed unpublished views about Google Inc’s YouTube revenue estimates and profitability to a reporter at Capital Magazine, a French publication, the civil complaint said.
Mahaney came to Citi in 2005 from Galleon Group, the hedge fund led by Raj Rajaratnam, who was later convicted in one of the biggest insider-trading crack-downs in US history.
DEVELOPING TALENT: The electronics contractor is looking to recruit people to work in core tech fields and emerging industries like electric cars and robotics Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, has launched a recruitment drive, offering a monthly salary of no less than NT$45,000 (US$1,485) to university graduates. For those with a master’s degree, the starting pay would be NT$52,000 per month at the minimum, while doctorate degree holders would receive at least NT$60,000 a month, Hon Hai said a statement issued early this week. The latest recruitment drive is aimed at attracting talent in core technology fields — artificial intelligence, semiconductors and next-generation mobile communications — and emerging industries — electric vehicles, digital healthcare and robotics, the
MRT TRAVEL FALLS: In February, ridership on the Taipei MRT System fell 8.96 percent from an average of 2.01 million per day in January Scooter sales jumped 13 percent last month as more commuters turned to two-wheelers to avoid public transportation amid the COVID-19 pandemic, the latest statistics showed. Sales expanded to 74,493 units last month, compared with 65,913 units in February, statistics released on Wednesday by Kwang Yang Motor Co (光陽工業) and the Ministry of Transportation and Communications showed. In the first quarter, aggregate sales slid 0.51 percent year-over-year to 186,627 units, from 187,580 units, data showed. Kwang Yang, the nation’s biggest scooter manufacturer, continued to lead the market by selling 24,136 vehicles last month, growing 6.12 percent from 20,785 units in the previous month, while
Asustek Computer Inc (華碩), the nation’s leading PC vendor, yesterday launched its first dual-screen gaming laptop powered by Intel Corp’s latest central processing units (CPUs). The PC manufacturer’s announcement closely followed the US chipmaker’s unveiling of its 10th Generation Core H-series, the fastest commercial mobile processors with speeds of up to 5 gigahertz. Although Asustek’s Zephyrus Duo 15, the highlight of its Republic of Gamers line, is not the company’s first laptop with two screens, it is its first designed specifically for gaming. Nestled between the primary display panel and the keyboard, the secondary display, which Asustek calls the ScreenPad Plus, is angled
NO ILL EFFECT: Last month’s data mainly reflected deals made in February, when the spread of COVID-19 was still relatively mild in Taiwan, housing brokers said Housing transactions in the six special municipalities totaled 19,824 units last month, up 7.8 percent from a year earlier, brokers said, citing government data. Last month’s data mainly reflected deals made in February, when the pinch of the COVID-19 pandemic was not yet evident, they said. Taoyuan posted the largest improvement, with housing transactions soaring 36.6 percent year-on-year to 3,676 units, local government data showed. Taiwan Realty Co (台灣房屋) attributed the pickup to the completion of two presale residential projects in the municipality. Houses in Taoyuan have increasingly gained in popularity in the past few year years due to relatively affordable home prices and