Citi analyst felled by Facebook IPO fallout

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The firing of Citigroup stock analyst Mark Mahaney  in the regulatory fallout from Facebook Inc's initial public offering was greeted with shock and dismay.  (Reuters) The firing of Citigroup stock analyst Mark Mahaney in the regulatory fallout from Facebook Inc's initial public offering was greeted with shock and dismay. (Reuters)
SummaryThe firing of Citigroup stock analyst Mark Mahaney in the regulatory fallout from Facebook Inc's initial public offering was greeted with shock and dismay.

The firing of Citigroup stock analyst Mark Mahaney on Friday in the regulatory fallout from Facebook Inc's initial public offering was greeted with shock and dismay in Silicon Valley, where Mahaney was a well-known and well-liked figure.

Pretty shocked, was the reaction of Jacob Funds Chief Executive Ryan Jacob, who described Mahaney as one of the most respected financial analysts covering the Internet industry.

I'd put him at the top. If not at the top, then near the top, said Jacob. He really knew what to look for.

In addition to firing Mahaney, Citigroup paid a $2 million fine to Massachusetts regulators to settle charges that the bank improperly disclosed research on Facebook ahead of its $16 billion IPO in May.

The settlement agreement said Mahaney failed to supervise a junior analyst who improperly shared Facebook research with the TechCrunch news website.

The settlement agreement also outlined an incident in which Mahaney failed to get approval before responding to a journalist's questions about Google Inc -- and told a Citigroup compliance staffer that the conversation had not occurred -- even after being warned about unauthorized conversations with the media.

Mahaney declined to comment.

Mahaney got his start in the late 1990s, during the first dot-com boom where he worked at Morgan Stanley for Mary Meeker, one of the star analysts of the time. He went on to work at hedge fund Galleon Group before moving to Citigroup in 2005. Unlike most of his New York-based peers in the analyst world, Mahaney worked in San Francisco's financial district, close to the companies and personalities at the heart of the tech industry.

Earlier this month, Mahaney was named the top Internet analyst for the fifth straight year by Institutional Investor. The review cited fans of Mahaney who praised a systematic investment approach that allows him to avoid the waffling often evidenced by other analysts.

Mahaney's Buy rating on IAC/InteractiveCorp in April 2011, when the stock traded at $33.32, allowed investors to lock in a 51 percent gain before he downgraded the stock to a Hold at $50.31 a few months later, according to Institutional Investor.

But it wasn't only his stock picks that put him in good stead. He earned kudos for simply being a nice guy.

He's a kind and thoughtful person and that's evident in the way he deals with people, said Jason Jones of Internet investment firm HighStep Capital.

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