Zuckerberg 'Hacks' through SEC laws as HNIs lap up Fb stock
It has only been a couple of days since Facebook became richer by half a billion dollars. Money does buy happiness, and a way out of the IPO. However, only the rich can get richer. Unless your net worth is calculated in millions, you are not invited to the party.
January 07, 2011 / 20:28 IST
It has only been a couple of days since Facebook became richer by half a billion dollars. Money does buy happiness, and a way out of the IPO (reporting its financials doth not a public listing make). However, only the rich can get richer. Unless your net worth is calculated in millions, you are not invited to the party.
First, lets take a look at what the SEC has to say. According to the Securities and Exchange Act of 1934, a publicly traded company has to file periodic reports, and report its financials and business operations. These reporting obligations are inescapable and mandatory by law. If a private company exceeds 500 investors, these obligations become enforceable as well, irrespective of whether the company is listed or not.By getting its fundings from Goldman and DST, Facebook increases the number of investors by just two entities. Goldman however, is offering its clients access to about USD 1.5 bn worth of equity in Facebook; and the number of people availing the offer is likely to be well over 499. Which means Facebook gets it fundings from more than 500 investors; but not really, as far as the SEC is concerned. Right now, everybody is keeping a stiff upper lip; but if Facebook gets away with this, surely others will follow suit, and the SEC does not want that. Infact the SEC has had its eyes on Facebook shares trading in the secondary market even before the Goldman investment.Who sells these shares? The ones who have them, of course. The company used to give its employees stock options (now it reportedly gives them RSUs or Restricted Stock Options), and some of them sometimes sell. So can you start buying Facebook stocks? Yes. The stocks are auctioned in the secondary market. Check out SharesPost. Or Secondmarket, for example. Just to give you an idea,
SharesPost boasts USD 125 bn in capital, 450,000 members, and $1bn in posts to buy or sell. Its a rich man
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