Publishing/Writing: Insights, News, Intrigue

01/04/2011

Facebook Valued at About 50 Billion!


A little business and finance tonight RE a major source used by writers and publishers.

Facebook is used by many artists to promote their works…I’m particularly bad at it! I need to really get motivated and learn how to use FB more EE (efficiently and effectively). Seems I’m just running out of gas, procrastinating or too damn lazy!

FB is absolutely blasting into the stratosphere, financially speaking, but may be getting greedy, too damn secretive and over-reaching by getting investment capital through an investment fund vehicle offered by Goldman Sachs (Goldman Sachs? Aren’t they in the Greedy & Devious Who’s Who Hall of Fame?).

You see, by not going public with an IPO (Initial Public Offering) and selling stocks on the open market, FB can stay private and don’t have to disclose financial information as long as they have less than 500 investor owners-of-record. Goldman Sachs would only count as one investor no matter how many of their clients bought shares through their offered fund vehicle.

A matter being looked into by the SEC (that’s the Securities and Exchange Commission…NOT the Southeastern Conference in College football…my favorite)

More details from Bloomberg News through Crain’s New York Business:

Facebook, Goldman deal may draw SEC scrutiny
Securities and Exchange Commission is scrutinizing the market for trading shares of closely held companies, including Facebook.

Goldman Sachs Group Inc.’s plan to offer clients up to $1.5 billion in Facebook Inc. equity may invite U.S. regulators to take a closer look at whether the owner of the world’s most popular social-networking site is circumventing disclosure rules, securities lawyers said.

The Securities and Exchange Commission, whose rules require any company with more than 499 investors to disclose financial information, is already scrutinizing the market for trading shares of closely held companies including Facebook, according to a person familiar with the inquiry, who declined to be identified because the matter isn’t public.

Goldman Sachs invested $450 million in Facebook and is planning to create a special purpose vehicle for its clients to make additional investments worth as much as $1.5 billion, according to two people familiar with the matter who spoke on condition of anonymity because the deal is private. Some private companies avoid crossing the disclosure threshold when investors’ funds are channeled through a single entity, such as a private equity firm or hedge fund.

“The real question is, what are the details of this special purpose vehicle?” said James Angel, a finance professor at Georgetown University’s business school in Washington. If the investment is designed to circumvent the rule, “the SEC should be looking very closely at it.”

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