

Goldman Limits Facebook Investment to Foreign Clients because of SEC/NYT - ramanujan
http://dealbook.nytimes.com/2011/01/17/goldman-limits-facebook-investment-to-foreign-clients

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gatsby
This will have no impact on the American Goldman client who's eager to invest
in Facebook. US Goldman investors with the ability to put several million
dollars into FB won't mind: they likely own existing foreign investment
accounts/vehicles, and are excited that the SEC won't have any control over
their investment.

I applaud the NY Times for their scrutiny over the past few weeks, but it's
naive to think they're stopping US investment.

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joseacta
I think it might be a way from them to put some pressure to the SEC.

1\. GS is taxpayer subsidize (To Big To Fail) company. As they're a bank
holding company, they can tap funds from the Feds at a very low rate. Because
of this, they can make deals with an enormous amount of risk, and not care. If
it fails, and cash is needed, just tap the funds.

2\. The contract between GS and investors, explicitly says that GS can sell
their stake on Facebook without informing investor. A clear sign of the risk
associated with the deal. [http://www.bloomberg.com/news/2011-01-06/goldman-
sachs-discl...](http://www.bloomberg.com/news/2011-01-06/goldman-sachs-
discloses-it-can-sell-hedge-facebook-stake-without-warning.html)

3\. The SEC can't do nothing about this. There's no law that prohibits GS to
do this. Instead, SEC is looking for an alternative to block the deal, as the
500 investor limit: [http://dealbook.nytimes.com/2011/01/03/facebook-and-
the-500-...](http://dealbook.nytimes.com/2011/01/03/facebook-and-
the-500-person-threshold/)

4\. GS takes advantage of the media attention to the case says it will limit
investments to foreign clients. It's like saying: hey, the SEC is trying to
block the deal at all costs, so instead, we won't support american investors
and give priority to foreigners as the international community is more open to
investment and risk taking.

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shareme
Something is wrong. SEC review will happen no matter if the investors are US
or not, hence it snot the real reason obviously.

Question what is the difference banking laws wise if its non US institutional
investors compared to US institution investors? Remember GS is now bank
holding company thus it might nor be SEC but bank holding laws influencing the
change..

Or it may be that non-US investors balked at US media coverage and GS hopes to
duck that coverage in the future..

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mdda
IANAL, but: Banking law isn't relevant here : This is to do with offerings of
securities.

The SEC regulates offerings in the US. Goldman is no longer offering these
securities in the US, so the SEC is not involved.

As someone else points out, if a US client seriously wants to jump through
hoops to invest, I'm sure Goldman would help out an offshore entity.

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beoba
It's such a bad deal that it's already been banned.

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pyre
I missed that part of the article. It seems like they are afraid that all of
the media attention would qualify as 'advertisement' which they are not
allowed to do. That has nothing to do with how good/bad the deal is.

