The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

Goldman’s Facebook deal strikes blow to private-stock market

The SEC’s regulatory interest in the market in private-company shares might cripple this source of funding.

It looks as if Goldman Sachs’s $450 million investment in Facebook might put the kibosh on the growing market in trading private company stock. As reported in Euromoney’s December issue (Private stock markets – an alternative to IPOs), growth companies, particularly those in the social media sector, are increasingly delaying their IPOs and turning for liquidity to direct investments or private-stock trading platforms, such as SharesPost or SecondMarket. Now the hefty investment by the public’s most disliked investment bank into the social media darling has sparked an investigation by the SEC into pooled investment funds in pre-IPO stock.

The key query by the SEC seems to be whether private firms’ stock is held by more than 499 shareholders. If that is the case, firms, even though private, are subject to certain financial disclosures.

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to Euromoney.com and Asiamoney.com analysis and receive expertly-curated updates direct to your inbox.

 

Already a user?

Login now

 

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree