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Goldman Sachs' Facebook deal: A 'huge embarrassment'?
The investment bank withdraws its offering of private Facebook shares to U.S. clients. What happened?
 
The "intense media coverage" surrounding the Goldman Sachs-Facebook deal led the S.E.C. to open an inquiry into the offering.
The "intense media coverage" surrounding the Goldman Sachs-Facebook deal led the S.E.C. to open an inquiry into the offering.
Corbis, CC BY: benstein

Goldman Sachs has told its wealthiest U.S. investors that they will not be able to invest in Facebook after all, because of fears that the deal could run afoul of securities regulations. Goldman bought into the social networking site with a $450 million investment, and its plan to offer prized clients this unique opportunity was supposed to be a triumph. Goldman says it will continue to let foreign clients, who aren't subject to S.E.C. rules, invest in Facebook, but does this mean Goldman's plan to sell up to $1.5 billion in private Facebook shares is unraveling? (Watch a Bloomberg report about the deal)

This could wreck Goldman's plans: This is more than simply a "huge embarrassment" for Goldman Sachs, says Joe Weisenthal in Business Insider. It has left the Wall Street powerhouse's relationship with Facebook "frayed" — as The New York Times' Andrew Ross Sorkin puts it — so Goldman might lose the chance to eventually "lead a Facebook IPO." Goldman wanted to "play the peacock a bit," but, due to "bungling" or "regulatory hostility" or both, its prized deal is "coming unglued."
"The Facebook fiasco is a PR disaster for Goldman Sachs, and now it may lose out on an IPO"

The deal is fine. Only Goldman's reputation suffered: "The reworking won't hurt the Facebook stock deal," says Shira Ovide in The Wall Street Journal. Goldman has "plenty of foreign investors willing to pick up the slack from their U.S. counterparts." But there will still be plenty of "hand wringing — and Schadenfreude." Goldman executives are "the smartest of the smarties on Wall Street," so it's puzzling that they could get "caught off guard by regulatory and public reaction" to such a high-profile stock sale.
"Goldman-Facebook stock snag: The reaction"

Actually, very little has changed: Goldman is trying to blame The New York Times, says the blog Techdirt, for breaking the story and getting the public and regulators interested in what was supposed to be a quiet deal. But that's "silly" — the "whole thing has been an effort to route around the regulations" which require companies to provide detailed earnings information once they have more than 500 investors. And not much has changed, even for Goldman's American clients, because they can probably "figure out offshore vehicles for getting in on this deal anyway."
"Goldman Sachs says Facebook offer barred from U.S. investors, blames NYT for making plans public"

 

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