Only non-US Goldman Sachs clients will be able to take part in the company’s sale of $1.5 billion worth of Facebook stock, the bank told clients today.The WSJ reports the reason is regulatory concerns.
At the beginning of the month, Goldman announced it had invested $450 million in Facebook at a $50 billion valuation.
Almost immediately, the offering was over-subscribed. Now only internationals will get in on the action.
It’s unclear what were Goldman’s regulatory concerns.
When the deal was announced, the SEC began investigating almost immediately, concerned that it might push Facebook’s shareholder count above 500. Because Facebook has more than $10 million in assets, if it has 500 shareholders it also must disclose its financials to the public.
What’s odd though, is that even if the Goldman deal DID push Facebook past the limit, Facebook would have 120 days after its current fiscal year to begin disclosing. In the prospectus for the Goldman offering, Facebook said it would disclose its financials and perhaps even IPO before April 2012 – before that regulatory deadline.
It’s more likely that the SEC may have other concerns.
In any event, the big losers here are the US investors who wanted to buy Facebook stock–the same investors that the SEC is supposedly protecting. Goldman is powerful enough that it can sell Facebook stock outside the SEC’s jurisdiction, and that’s exactly what it’s doing.