Morgan Stanley (NYSE:MS), the principal underwriter of the $109 billion initial public offering of Facebook (NASDAQ:FB) was fined $5 million by Massachusetts regulators for improper supervision of analysts before the May 17 IPO.
According to the regulator, there was a conflict of interest when a senior banker coached a Facebook official on what to say to analysts.
It also claimed that the two firms failed to tell all investors that revenues may be lower than forecast.
Many investors criticised Facebook as its shares fell following the listing.
The sale, which was over-subscribed and took place in May 2012, was one of the most hotly anticipated stock floatations in recent history and valued the eight-year-old firm at $104bn.
Facebook sold close to 421 million shares, at $38 a share, raising $16bn.
However, the hype surrounding the listing waned shortly after trading started on the New York stock exchange as shares fell below their listing price on concerns about the pace of future profit growth.
Facebook's shares have dipped almost 30% since its listing in May.
Morgan Stanley did not confirm or deny the allegations by the regulator.
However, it said in statement that it was pleased to have reached a settlement and to have put the matter behind it.
The problem affecting Facebook was that an increasing number of people were visiting its website via mobile devices, such as phones or tablet computers.
Facebook warned that because it did not display advertising on the mobile versions of its website, then there may be a decline in revenue from ad sales, its biggest source of income.