Morgan Stanley (NYSE:MS) has been fined $5 million by the Commonwealth of Massachusetts in connection with Facebook Inc (NASDAQ:FB)’s initial public offering.  A number of trading errors resulted in a lot of confusion for investors in connection with the social media giant’s IPO.

Morgan stanley

Morgan Stanley (NYSE:MS) was the lead underwriter for Facebook Inc (NASDAQ:FB)’s IPO. The financial firm has been criticized recently by some Facebook shareholders who said some important information was withheld just prior to the offering.

According to CNET, Massachusetts’ chief securities regulator, William Galvin, said Morgan Stanley (NYSE:MS) “engaged in dishonest and unethical business practices.” Reuters reports that Morgan Stanley selectively released sensitive information to some potential investors but not to others.

Galvin said a senior banker at Morgan Stanley assisted an executive at Facebook with releasing certain information and then advised the executive about how to discuss that information with analysts on Wall Street. Research analysts apparently received updated information about Facebook’s IPO and then released that information to institutional investors. However retail investors did not receive that information, which as Galvin said created “an unlevel playing field.”

The firm signed a consent decree in connection with the botched IPO, but it neither admitted or denied the decree’s text. The $5 billion fine basically amounts to a slap on the wrist for Morgan Stanley (NYSE:MS), which posted more than $32 billion in revenue last year.

Meanwhile a class action lawsuit filed in connection with Facebook Inc(NASDAQ:FB)’s botched IPO still looms on the horizon. Shareholders claim that they lost more than $7 million because the company didn’t fully disclose its financial health before its IPO.