A document sent to Goldman clients said:
“Goldman Sachs has received inquiries from regulators about the investment.
The memo described the inquiry as “preliminary.”
There were rumours after the deal was revealed this week that the SEC would be examining the venture. Now it’s been confirmed by insiders.
Apparently the regulator is concerned about a few issues including the structure of the deal and the media reports about it.
Federal and state securities regulators prohibit the use of what the laws describe as “general solicitation and advertising” in private offerings.
Companies or investment firms like Goldman that seek to raise money through a private offering cannot do anything that would be considered publicly promoting the deal, like an advertisement in or any communication to a media outlet. A violation of these rules could jeopardize an offering.
Violation of this regulation could spike the deal.
Apparently the offering surprised the SEC and there was confusion about whether or not Goldman had actually contacted the agency before going ahead with the project. Now the story is that the bank never contacted them.