Citigroup Inc. (C) was fined $2 million after a junior analyst improperly disclosed confidential information before Facebook Inc.'s initial public offering, Massachusetts' top financial watchdog said.

As a part of Facebook's underwriting syndicate, Citigroup Global Markets was barred from disseminating research until 40 days after the stock offering, Massachusetts Secretary of the Commonwealth William F. Galvin said today in a statement. Weeks before the IPO, a junior analyst at the unit e-mailed two employees at seeking feedback on a Facebook document that contained a senior analyst's view of investment risks and revenue estimates, Galvin said.

"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 social-network company's managers failed to revise forecasts before the IPO. 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.

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.

Shannon Bell, a spokeswoman for the New York-based company, didn't immediately respond to a phone call seeking comment.