The news that Facebook’s chief financial officer, Gideon Yu, is leaving the company means that the social networking site won’t be going public in April. The odds were against an IPO this month in any case but Facebook’s announcement seals the non-deal.
Facebook took the opportunity of Yu’s departure to release some limited financial data and said it had hired an executive search firm to find a successor with experience in running a public company. This might lead some to believe that it was ramping up to an IPO. But making this statement also means that SEC rules will barr Facebook from having an IPO in April.
Securities rules say that issuers are prohibited from attempting to “condition the market” by making statements about an IPO before an official registration statement is filed with the SEC. It’s basically meant to prevent companies from trying to a create a kind of advance hype for their public offering. Under current interpretations of the rules, the SEC will find a violation if the company makes market conditioning statements within 30 days of a registration statement. It’s almost certain that the SEC would take a dim view of the comment about looking for a CFO who has held that job at a public company.
So that rules out April for an IPO. A more cynical way to look at this might be to say that Facebook’s management purposefully made a market conditioning statement in order to hold off any push from investors or employees to hold an IPO soon.
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