Issues continue to surround the Facebook IPO listed earlier this year. In the immediate aftermath of one of the most hyped IPO’s of all time, investors were left frustrated and angry, seeing the stock price fall and then hearing rumors of institutional investors getting word in advance of falling forecasts. Litigation has begun to emerge, with state attorney generals in many cases going after the banks involved in the deal, and researching and potential SEC violations.

Most recently, Massachusetts Secretary of the Commonwealth William Galvin subpoenaed Citigroup (NYSE: C), Goldman Sachs Group Inc. (NYSE: GS), and others in connection with the decline of Facebook’s share price following its initial public offering in May, his office said.  Just yesterday, Galvin’s office said that Citigroup was fined $2 million after a junior analyst improperly disclosed confidential information before Facebook’s IPO.

As a part of Facebook’s underwriting syndicate, Citigroup Global Markets was barred from disseminating research until 40 days after the stock offering, Galvin said yesterday in a statement. This is a typical requirement from the SEC for quite periods heading into an IPO. About two weeks before the IPO, a junior analyst at the unit e-mailed two employees at TechCrunch.com seeking feedback on a Facebook document that contained a senior analyst’s view of investment risks and revenue estimates, Galvin said.

The Citigroup e-mails are part of a larger trove of documents that Galvin obtained by subpoenaing the bank along with the lead underwriters, Galvin’s office said. The probe began in May as Facebook’s stock slid amid lawsuits alleging that retail investors weren’t told negative news about Facebook’s prospects.  Galvin’s Securities Division is focusing on the roles of investment banks and securities analysts, and issues of disclosure, his office said.

Galvin’s statement in regards to Citi’s penalty stated that it “should serve as a warning to the industry as a whole. 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.” Citigroup fired Mark Mahaney, a senior technology analyst, according to a person with direct knowledge of the matter, as it settled Galvin’s claim that a junior analyst disclosed confidential information before Facebook’s IPO.

A drop in Facebook stock after the May 17 offering fueled shareholder complaints, regulatory probes and more than 40 lawsuits, with some investors claiming the social-network company’s managers failed to disclose revised forecasts before the IPO, and others blaming underwriters or analysts.

Facebook has said the lawsuits lack merit.  This saga appears far from over – though, a rising share price could go a long way to quelling the concerns.