Investors and regulators raised new concerns about the $16 billion IPO after Facebook shares fell a second straight day yesterday, extending losses to 18 percent below the $38 offer price.

The anticipation that preceded history’s biggest technology IPO has been replaced by investor ire, including about whether the offer was priced too high.

“Rather than anything illegal or untoward, the valuation was the truly unfathomable part of what’s causing this frenzy,” said Michael Holland, chairman of Holland & Co., a New York- based investment firm that oversees more than $4 billion.

Facebook increased the number of shares being sold in the IPO by 25 percent last week to 421.2 million and raised its asking price to a range of $34 to $38 from $28 to $35. The shares closed yesterday at $31 in the U.S.

The shares advanced 3.3 percent to $32.03 at 9:36 a.m. New York time.

Decision making

Facebook Chief Financial Officer David Ebersman was the point person on the deal, while Chief Executive Officer Mark Zuckerberg and Chief Operating Officer Sheryl Sandberg weighed in on major decisions, said people with knowledge of the matter, who declined to be identified because the process was private. Dan Simkowitz, Morgan Stanley’s chairman of global capital markets, was one of the main bankers. Michael Grimes, global co- head of technology investment banking, also played a key role.

Morgan Stanley, already taking heat for helping price the IPO, received more scrutiny yesterday. The company may face regulatory review over claims an analyst shared negative news about Facebook with institutional investors before the IPO, said Richard Ketchum, chairman and CEO of the Financial Industry Regulatory Authority, the industry watchdog.

‘Regulatory concern’

Those communications may be a “matter of regulatory concern” to both Finra and the SEC, Ketchum wrote in an e-mail. He wouldn’t say whether the agency is probing Morgan Stanley.

William F. Galvin, Massachusetts’ secretary of the commonwealth, said separately that his securities division subpoenaed Morgan Stanley to learn more about talks between Scott Devitt, the research analyst, and the firm’s institutional investors about Facebook’s revenue.

“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,” SEC Chairwoman Mary Schapiro told reporters in Washington today.

The New York-based investment bank said its procedures complied with all regulations. “Morgan Stanley followed the same procedures for the Facebook offering that it follows for all IPOs,” Pen Pendleton, a spokesman, wrote in an e-mail.

Morgan Stanley procedures

The bank said it sent a copy of a revised prospectus that Facebook filed May 9 to all of its institutional and retail investors. The filing disclosed that Facebook’s advertising growth hasn’t kept pace with the increase in users.