Facebook: A hitch in Goldman’s share sale
In a stunning reversal, Goldman Sachs said this week it would not offer shares of Facebook to its U.S. clients, citing the intense media attention the private share placement has generated, said Liz Rappaport and Aaron Luchetti in The Wall Street Journal. U.S. securities law bars investment banks from publicizing or advertising private placements of securities. The decision to bar U.S. investors, as well as Goldman’s own employees, from the $1.5 billion deal has “frustrated” Facebook executives and is a “black eye” for Goldman CEO Lloyd Blankfein, who has been trying to smooth relations with U.S. regulators since the firm settled a federal securities-fraud lawsuit last July for $550 million.
Critics say Goldman should have expected the media frenzy, said Richard Waters and Kara Scannell in the Financial Times. Wall-to-wall coverage of the deal, said former Securities and Exchange Commission chairman Harvey Pitt, “was predictable the minute you said the word ‘Facebook.’” The placement will proceed nonetheless, as Goldman reportedly has $7 billion in orders for shares from foreign investors, who aren’t constrained by U.S. regulations. But what once looked like a “coup” for Goldman has become an embarrassment.
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
SUBSCRIBE & SAVE
Sign up for The Week's Free Newsletters
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Latest Videos FromThe Week
Energy: BP swaps stock with Russia’s Rosneft
BP and Russia’s state-owned Rosneft have agreed to swap $7.8 billion in stock and jointly explore the Arctic for oil, said Brian Swint in Bloomberg.com. The swap, when completed, “will leave the Russian company holding 5 percent of BP shares,” making Rosneft BP’s largest shareholder. The alliance enables Rosneft to “take advantage of BP’s expertise and experience” in energy exploration, while BP gains access to Rosneft’s oil reserves to replace the reserves it sold to pay for last year’s oil spill in the Gulf of Mexico.
Bailouts: A resurgent AIG pays back the Fed
AIG has paid off the last of its debt to the Federal Reserve Bank of New York, positioning the insurer “to begin exiting U.S. ownership in the coming months,” said Serena Ng in The Wall Street Journal. The company last week paid $47 billion to the New York Fed, with $27 billion coming from the proceeds of asset sales and the remainder “drawn from the Treasury Department,” which expects to recoup the funds when AIG completes additional asset sales.
Quality control: Dirty factories spark a J&J recall
Johnson & Johnson’s McNeil Consumer Healthcare division has recalled more than 45 million products after a review of conditions at a McNeil plant in Fort Washington, Pa., said Charles Riley in CNNmoney.com. The review found that the company’s equipment-cleaning procedures were inadequate and that McNeil had failed to document some cleaning work. The troubled McNeil division “has been dogged for over a year by a series of recalls” and fines by federal regulators for a litany of manufacturing shortcomings.
Whistle-blowers: Swiss bank exec tips off WikiLeaks
Former Swiss banker Rudolf Elmer, who is preparing for trial for violating banking-secrecy laws, this week handed WikiLeaks founder Julian Assange two computer discs “detailing thousands of offshore bank accounts,” said Jim Sciutto and Jessica Hopper in ABCNews.com. The discs, Elmer says, might also contain evidence of tax evasion and other illegal activities by wealthy clients. WikiLeaks said it would verify the data and publish it within weeks. Elmer’s trial for violating the confidentiality of his former employer, Bank Julius Baer, gets under way in Switzerland this week.
