Citigroup Fires Mark Mahaney Over Facebook IPO Disclosures

Citigroup Fires Mark Mahaney Over Facebook IPO Disclosures
By [Public domain], via Wikimedia Commons

Citigroup Fires Mark Mahaney Over Facebook IPO Disclosures

Citigroup Inc. (NYSE:C) fired Mark Mahaney, a senior analyst for its investment arm,  Citigroup Global Markets Inc, for improperly disclosing confidential information about Facebook Inc (NASDAQ:FB) initial public offering (IPO), and releasing unpublished information on Google Inc. (NASDAQ:GOOG) revenue estimated for YouTube.

The Securities regulator of the State of Massachusetts filed a complaint against Citigroup Inc. (NYSE:C), for Mahaney’s misconduct in disclosing confidential information.

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According to Massachusetts Secretary William Galvin, Mahaney signed a nondisclosure  agreement with Facebook Inc (NASDAQ:FB), and he was required to treat the financial information and business plans of the social networking giant, related to its IPO, as strictly confidential.

However, a junior analyst confidential, nonpublic information of CGMI to TechCrunch, including Mahaney’s analysis of the investment risks, investment positives, EBITDA, valuation, and revenue estimates on Facebook Inc (NASDAQ:FB) as a public company, before its IPO on May 18. The junior analyst works under Mahaney.  Citigroup Inc. (NYSE:C) fired the junior analyst on September 27.

In addition, the complaint cited that Mahaney disclosed confidential information about his revenue estimates for Google Inc. (NASDAQ:GOOG)’s YouTube to a French journalist.

The Massachusetts Securities Division found out the misconduct of the Mahaney and his junior analysts through the e-mails sent to TechCrunch employees and to the French journalist.

The securities regulator alleged that Citigroup Inc. (NYSE:C) failed to supervise Mahaney and his junior research analyst, which allowed their dishonest and unethical practices in the securities business, and the company was ordered to pay $2 million in fines. In a statement, Massachusetts Secretary Gavin said, “This penalty should serve as a warning to the industry as a whole.”

Mahaney joined Citigroup in 2005. He was recognized as the number one Internet analyst in a survey conducted by Institutional Investor Magazine. He was instrumental in winning several of the IPO business contracts for Citigroup, including the initial public offerings of Zillow Inc (NASDAQ:Z), Bankrate Inc (NYSE:RATE), and Active Network Inc (NYSE:ACTV).

The WallStreet Journal cited the comment of Spencer Rascoff, CEO of Zillow, regarding Mahaney. According to him, the senior analyst is “absolutely” one of the factors that influenced the company in choosing Citigroup Inc. (NYSE:C) as its lead IPO bank. Rascoff said, “Mahaney is widely regarded as one of the influential analysts covering the internet.”


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