Business Insider’s Henry Blodget, who knows a thing or two about analyst/IPO scandals, writes that Facebook and/or its bankers could be in trouble for not disclosing material information to the public about its financial health.

Reuters has been reporting for several days that analysts at three of Facebook’s bankers cut estimates for the company during the roadshow leading up to the IPO. But the banks didn’t tell the public.

Now, regardless of why the analysts cut their estimates (and this will be important), estimate cuts of any sort are material information, so if this news was given to some institutional clients, it also obviously should have been given to everyone.

That’s the first problem.

The second potential question and problem is whether Facebook told the underwriters to cut their estimates—either by directly telling them to, or, more likely, by “suggesting” that the analysts might want to revisit their estimates in light of the new disclosures in the prospectus.

If there was any communication at all between Facebook and its underwriters regarding the analysts’ estimates, Facebook will likely be on the hook for this, too.

This is one to watch.

— Reuters looks at how overvalued Facebook, which started trading at $38 a share on Friday, looks to be (emphasis mine):

As bad as the declines have been, though, a view persists that the stock remains overvalued.

Thomson Reuters Starmine conservatively estimates a 10.8 percent annual growth rate — almost exactly the mean for the technology sector — which would value the stock at $9.59 a share, a 72 percent discount to its IPO price.

Similarly, the company’s price-to-earnings ratio remains lofty, even after the selloff. The $31 price implies a forward P/E of 60, compared with Google’s 13.3 forward price-to-earnings ratio (for a similar rate of growth).

— Matt Stoller has a must-read piece on how Big Money corrupts how at least some politicians (and I would add: regulators and journalists) think and act. It’s not just campaign donations for their re-elections.

Most activists and political operatives are under a delusion about American politics, which goes as follows. Politicians will do *anything* to get reelected, and they will pander, beg, borrow, lie, cheat and steal, just to stay in office. It’s all about their job.

This is 100% wrong. The dirty secret of American politics is that, for most politicians, getting elected is just not that important. What matters is post-election employment. It’s all about staying in the elite political class, which means being respected in a dense network of corporate-funded think tanks, high-powered law firms, banks, defense contractors, prestigious universities, and corporations. If you run a campaign based on populist themes, that’s a threat to your post-election employment prospects. This is why rising Democratic star and Newark Mayor Corey Booker reacted so strongly against criticism of private equity - he’s looking out for a potential client after his political career is over, or perhaps, during interludes between offices. Running as a vague populist is manageable, as long as you’re lying to voters. If you actually go after powerful interests while in office, then you better win, because if you don’t, you’ll have basically nowhere to go. And if you lose, but you were a team player, then you’ll have plenty of money and opportunity. The most lucrative scenario is to win and be a team player, which is what Bill and Hillary Clinton did. The Clinton’s are the best at the political game - it’s not a coincidence that deregulation accelerated in the late 1990s, as Clinton and his whole team began thinking about their post-Presidential prospects.

He notes that Bill Clinton gutted financial regulation in the late 1990s and, weeks after signing the infamous Commodity Futures Modernization Act, cashed a quarter-million dollars worth of checks from Wall Street for speeches and has since raked in $80 million.

Meanwhile, Russ Feingold, a Senator who did go after Wall Street, is a professor in the Midwest. Eliot Spitzer is a struggling TV host and writer.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.