Facebook: Goldman Sachs excludes US investors from deal

[rathi]

BBC News - Facebook: Goldman Sachs excludes US investors from deal

There has been speculation that the investment plan might breach US regulations designed to restrict share trading in private companies.

Wealthy investors are queuing up for a slice of Facebook, the world's largest social networking site, which reportedly has a market value of $50bn.

But the Securities and Exchange Commission (SEC) is watching closely, amid concern that by staying private Facebook is able to by-pass public disclosure rules..

Goldman looks very shady in this deal. They are essentially getting people to invest in Facebook without actually being required to give investors details about Facebooks financials. That makes it easy to sell an overvalued company (50 billion anyone?) for quick buck along with brokerage fees before the whole house of cards falls apart. That sort of scam was one of the key players in the mortgage security disaster.

 

[Albert Di Salvo]

This is a Private Placement, not a Public Offering. Only sophisticated and wealthy investors can subscribe. In other words, only people who can afford the risk of a complete loss of their investment can subscribe.

What the story says is that it is safer to peddle the securities to Europeans, South Americans and Asians than to Americans. The regulatory regime is uncertain in America. There is less risk of hostile action by governmental instrumentalities and/or individuals in foreign countries. So if one has a choice between buyers, it makes sense to reduce the risk. It's the prudent thing to do.