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American authorities have reportedly launched an investigation into Facebook's multi-billion initial public offering, as the social networking giant rounded off the worst start for a major US flotation in five years. Facebook shares slumped 8.9 percent in the wake of reports that two of the banks that helped advise Facebook on the IPO cut their sales forecast for the company over the last fortnight. According to a Wall Street Journal report, the reductions from Morgan Stanley and Goldman Sachs may not have reached all investors before they bought shares in the 104 billion-dollar float. Rick Ketchum, the head of the Financial Industry Regulatory Authority, said that 'the allegations, if true, are a matter of regulatory concern.' Mary Schapiro, the head of the Securities and Exchange Commission, echoed the view, The Telegraph reports. "There is a lot of reason to have confidence in our markets and the integrity of how they operate, but there are issues we need to look at specifically with regard to Facebook," the paper quoted Schapiro, as saying. According to the paper, the state of Massachusetts also said that it is seeking information about discussions that Morgan Stanley had with potential investors over Facebook's future revenues. The decline in Facebook shares on Tuesday means they have now has now tumbled 18percent since they were sold for 38 dollars a share last week. That is the worst opening three days for a company raising more than 1 billion dollar in a flotation since 2007.

Facebook IPO faces US regulatory probe as shares plummet 20pc in two days