NEW YORK (CNNMoney) -- At this point, there's little question that Facebook's IPO was a disaster. But was it illegal?
That's the question lawyers, regulators and other observers are asking as allegations swirl that major clients of Morgan Stanley (MS, Fortune 500) and other banks involved in the offering may have had access to privileged information ahead of the stock's debut.
"We need to be assured that everyone, every investor, gets treated the same," William Galvin, Secretary of the Commonwealth of Massachusetts, told CNN Wednesday. Galvin has issued a subpoena to Morgan Stanley seeking information about the bank's contacts with clients ahead of Facebook's IPO last week.
Law enforcement officials have not accused either Facebook (FB) or the banks that underwrote its IPO of wrongdoing.
On Wednesday, however, lawyers representing investors who purchased Facebook stock filed suit against the tech giant and the banks involved alleging that they withheld information that should have been disclosed in public documents.
The suit claims that Facebook executives told the underwriter banks to lower their revenue projections for the company, and that the banks relayed this information to favored clients but not to the general public.
If true, this would likely be in violation of federal securities law, which dictates that all "material information" -- facts that could influence investor decisions -- be disclosed by public companies and companies planning to go public in their filings with the Securities and Exchange Commission.
Documentation to support this claim is not provided in the lawsuit, though Darren Robbins, a lawyer for the plaintiffs, said his team had access to "witnesses and shareholders and other sources of information."
Morgan Stanley, JPMorgan (JPM, Fortune 500), Bank of America (BAC, Fortune 500) and Goldman Sachs (GS, Fortune 500) did indeed revise their revenue projections for Facebook shortly before its IPO, according to Reuters, though these revisions came after Facebook's filed amended documents with the SEC.
The company had previously disclosed difficulties generating ad revenue from its growing body of users on mobile devices, and in a May 9 filing, it noted briefly that these problems had continued in recent months.
"We believe this increased usage of Facebook on mobile devices has contributed to the recent trend of our daily active users (DAUs) increasing more rapidly than the increase in the number of ads delivered," Facebook said.
"Based upon our experience in the second quarter of 2012 to date," the company added, "the trend we saw in the first quarter of DAUs increasing more rapidly than the increase in number of ads delivered has continued."
Within the next two days, Reuters said, the four banks' research departments lowered their estimates. Those estimates were later communicated to major investors but not the general public.
Underwriters -- the banks that handle an IPO -- have close contact with a company before it goes public, though they are subject to restrictions on what can be shared between their research divisions and bankers working directly on the IPO. This is in order to prevent conflicts of interest that could lead to misleading research.
Researchers at underwriter banks are prohibited from publishing analysis about the firm until 40 days after the IPO, though they are permitted to discuss their views with clients orally under certain conditions.
A crucial question is whether the banks' analysts lowered their estimates based solely on Facebook's public filings, or if they received additional information from the company that was not made public.
"Those analysts didn't have a miraculous epiphany concurrently and modify those numbers," said Robbins, the lawyer for the Facebook investors.
If the estimates were based only on public information, investors may have trouble prevailing in a lawsuit, said Dominic Auld, a lawyer at the firm Labaton Sucharow who specializes in litigation on behalf of shareholders. Auld's firm in not involved in the suits against Facebook but may consider joining at some point.
"If they feel different about this company based on the fundamentals ... banks have the right to do that, to change their viewpoints," Auld said. "I don't think that's actionable."
Morgan Stanley, the lead underwriter of the IPO, has maintained that this was indeed the case.
"In response to the information [in Facebook's updated public filing], a significant number of research analysts ... reduced their earnings views to reflect their estimate of the impact of the new information," the bank said in a statement this week. It added that the IPO had followed "all applicable regulations."
If there was additional information from Facebook that prompted the banks to revise their estimates but was only shared with some investors, that could mean big problems for Facebook and the banks involved. Scott Sweet, senior managing partner at the research firm IPO Boutique, said he thinks this is indeed what happened.
"I believe they had more information, and wanted to, as usual, take care of the monster funds and leave retail investors with an uneven playing field," Sweet said. The banks notified a number of his firm's hedge fund clients about their revised estimates ahead of the IPO, he added.
Spokespeople for the banks named in the suit aside from Morgan Stanley either declined to comment or were unavailable for comment.
Facebook has called the shareholder suit "without merit" but has declined to comment in detail.
For now, all the questions of legality surrounding the IPO are far from being answered.
The SEC declined to comment, while Massachusetts' Galvin cautioned that his probe was still in the early stages. A spokeswoman for the Financial Industry Regulatory Authority, which is also looking into the matter, offered a similar note of caution.
"Until we unwind the facts and circumstances surrounding this situation, it is inappropriate to speculate about what potential violations may have occurred," she said. 
