A civil suit was filed by shareholders Wednesday alleging that the IPO's underwriters, led by Morgan Stanley, improperly disclosed changes to their analysts' performance forecasts for Facebook. The suit, filed in U.S. District Court for the Southern District of New York, followed warning signs Tuesday that financial regulators would launch investigations into the alleged improper communications by Facebook's underwriters.

Congress threatened to get into the act as well: Senate Banking Committee Chairman Tim Johnson, D-S.D., issued a statement that the panel would look into the IPO.

"I have instructed my staff to conduct due diligence regarding issues raised in the news about Facebook's IPO," he said, adding that he would determine whether to hold a hearing depending on what the staff members learn.

According to the lawsuit, Facebook failed to reveal in its revised IPO prospectus that it was experiencing a "severe and pronounced reduction in revenue growth" because more consumers were accessing the social networking site via mobile devices, a platform from which Facebook derives little ad revenue. The suit said that Morgan Stanley and other Facebook underwriters revised Facebook's financial performance estimates during the IPO roadshow in the weeks leading up to the company's share debut. This information was "selectively disclosed" to certain "privileged investors" but not disseminated broadly, the lawsuit alleged. The suit, brought by Robbins Geller Rudman & Dowd LLP, is seeking class-action status and damages of undisclosed size. A Morgan Stanley representative said Wednesday the bank had "no comment on regulatory or legal inquiries." The bank had issued a statement Tuesday regarding the Facebook IPO process, saying: "Morgan Stanley followed the same procedures for the Facebook offering that it follows for all IPOs. These procedures are in compliance with all applicable regulations."

Shares of Facebook climbed Wednesday to close at $32, up $1 or 3.23%. It has a market capitalization of $68.4 billion. When the market closed Tuesday, however, the company's shares, which debuted May 18 at $38 apiece, had dipped 18% below their IPO price.

The Facebook IPO, which raised $16 billion for the company and granted it an initial $104 billion valuation (making it the most highly valued company to go public), has gone from one of the most highly anticipated debuts to one of the most criticized.

During the week before they priced, Facebook boosted the number of shares being sold by 25% and raised the expected price range to $34 to $38, from a previously established $28 to $35 range.

After a delayed start May 18 due to Nasdaq technology glitches, Facebook's shares climbed less than 1% to a first-day close just 23 cents above their $38 IPO price.

From an equity analyst's perspective, the scrutiny into how Facebook's underwriters handled the IPO was "mostly noise," said Wedbush Securities Inc.'s Michael Pachter. But he and others were still scratching their heads over how Morgan Stanley and the other underwriters could have boosted the number of shares to be offered by 84 million the day before they priced on May 17.

"It's economics 101, supply and demand: The supply of stock exceeded the demand for the stock by a lot," Pachter said. "The underwriters horribly misjudged the demand.

"There's not much information about how this company makes money, the underwriters can't issue research on the stock for 40 days, so the average Joe doesn't have the information needed to be educated about this company, and therefore is going to sit this out," he added. The notion that some investors were privy to information that the average retail investors did not have access to did not sit well with regulators.

Securities and Exchange Commission chairwoman Mary Schapiro on Tuesday reportedly told journalists in Washington that "there are issues that we need to look at specifically with respect to Facebook."

When asked Wednesday for details about a potential SEC investigation, a spokesman said the agency "is not specifying."

Richard Ketchum, chairman and CEO of the so-called industry watchdog Financial Industry Regulatory Authority, said Tuesday in an interview with Reuters that if the reports about Morgan Stanley sharing negative news about Facebook before its IPO are true, "the allegations are a matter of regulatory concern to FINRA and the SEC." A spokesman for Rep. Barney Frank of Massachusetts, the ranking Democrat on the House Banking Committee, declined to comment on the matter.

The IPO is receiving scrutiny on the state level as well. William Gavin, the secretary of the Commonwealth of Massachusetts and the chief securities regulator in the state, issued a subpoena to Morgan Stanley regarding its analysts interactions with Facebook investors.