NEW YORK (CBS.MW) -- Citigroup shares fell more than 7 percent Tuesday, dragging the financial sector lower with the nation's largest financial institution reportedly the target of a widening investigation of its IPO practices.

A "sell" rating from a top analyst also pressured Citigroup's shares, spilling over throughout the financial sector.

The Philadelphia Bank Sector Index ($BKX) fell 4 percent, and the Amex Securities Broker/Dealer Index ($XBD) dropped 4.4 percent.

Citigroup shares slipped in early action by $2.39, or 7.2 percent, to $30.36, helping pressure the Dow Jones Industrials. The shares also stood near the top of the New York Stock Exchange's most active list by volume.

Prudential Securities analyst Mike Mayo cut his rating on Citigroup (C) to "sell" from "hold" based on both his belief that the company will miss earnings estimates and on rising concerns about heightened legal risks and corporate governance improvements that "seem to have fallen short."

Mayo also trimmed his 2002 earnings estimate to $2.85 a share from $2.90 and its 2003 estimate to $3.30 a share from $3.50 as a result of various factors -- expectations for weak capital markets, Latin American debt exposure and consumer credit issues.

Adding to Citigroup's woes, New York state's attorney general is widening an investigation into former Salomon Smith Barney analyst Jack Grubman to include senior executives at Citigroup, according to a Wall Street Journal report. See full story.