The officials accused the bank of having "improper influence" over the research analysts covering the social media website at the time of its $16bn (£9.87bn) stock market flotation.
The bank has come under criticism for revealing revised financial information to investment banks - but not individual investors – ahead of the company's initial public offering of stock
Wall Street research analysts were warned that less robust mobile revenues had hit earnings and revenue forecasts - information that was not included in new documents Facebook filed with US securities authorities around a week before the flotation.
Massachusetts officials said these lower figures caused analysts to revise their annual revenue estimates down around 3% below the $5bn (£3.08bn) Facebook had forecast for this year.
Regulator William Galvin said a top Morgan Stanley banker taught Facebook executives how to disclose this sensitive financial information and organised phone calls with key analysts.
"Main Street investors were put at a significant disadvantage to Wall Street," Mr Galvin added.
In relation to the fine, he said: "With it we will get their attention and begin to take steps in restoring some confidence for retail investors to invest."
A spokeswoman for Morgan Stanley, which has not admitted or denied doing anything wrong, said it is "pleased to have reached a settlement".
She added that the company is "committed to robust compliance with both the letter and the spirit of all applicable regulations and laws".
He has already overseen a fine of $2m (£1.2m) for Citigroup over its analysts’ "improper disclosures" of information during the deal.
The fee for all of the event's underwriters was reported to be $176m (£108.5m) at the time.
Facebook priced its initial public offering at $38 (£23.44) a share, but they finished the first day of trading at just $38.23 (£23.58).
Since then, shares have fallen by around 30% below the IPO price.
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