
Goldman to Offer Facebook Shares Only to Non-U.S. Clients - ssclafani
http://online.wsj.com/article/SB10001424052748703396604576087941210274036.html
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maukdaddy
Two companies with questionable moral and business practices that certainly
deserve each other.

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bkudria
I agree with you, but that comment just isn't constructive.

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VladRussian
the comment explains symmetry breaking in the virtual space of companies under
the action of ethical force field. How that is not constructive?

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bkudria
Huh? What's the point?

I hate to break it to you, but the world of human affairs is not governed by
such simple dynamics.

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ryandvm
Amusing. I'm sure barring U.S. investors from participating in Facebook's
curious financial maneuvering will reduce the "intense media attention".

This feels like part of a grander marketing scheme designed to whip future
investors into a froth...

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originalgeek
Or perhaps a methodology to enable Goldman to fly a bunch of business through
a loophole in the law.

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sudont
Welcome to the next financial outlet after sub-prime mortgages.

There seems to be an entrepreneurial spirit to this, however: find a regulated
niche, weasel around it to provide clients with a high-growth and unsafe
market. If the SEC doesn’t clamp down on this, I can see this sort of dark
trading becoming popular enough to destabilize the economy once it fails.

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RickHull
> _find a regulated niche, weasel around it to provide clients ..._

Regulators can't regulate the demand away. They can only push it underground,
beyond the light of day. Whether this is a desirable social outcome or not I
leave as an exercise to the reader.

It's not clear to me why regulators want to prevent mutually agreeable
transactions from taking place. Surely when GS is on the other side of the
table, you are aware that you are swimming in the deep end with the big
boys...

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jasonwocky
> It's not clear to me why regulators want to prevent mutually agreeable
> transactions from taking place.

In general, because the regulatory functions are aware of information
asymmetries that could lead to large numbers of people transferring a
significant amount of wealth to smaller number of other people.

Wealth concentration is expensive for society, because those who lose out do
NOT give up their right to vote replacement money into their pockets. The more
of them there are, the more likely they are to get society to cover some of
their losses.

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RickHull
> _In general, because the regulatory functions are aware of information
> asymmetries that could lead to large numbers of people transferring a
> significant amount of wealth to smaller number of other people._

I doubt this is the actual principle upheld. You have just described the role
of insurance, as provided over the last 300 years or so, as something
regulators want to prevent. You have asymmetrical information and a massive
pool of people transferring premiums to a smaller group (the insurance
companies themselves). Then, when there is a payout, you have the smaller
group transferring massive amounts to yet smaller individuals (the ones who
experienced catastrophic loss).

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jacquesm
What a weird world we live in which a uniquely American venture can not offer
its stock to American investors because of investment rules, regulations and
the unspecified 'media attention' (does that mean they're scared that if the
price drops after the offering they'll be sued? Are they expecting it to
drop?)

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damoncali
To be fair, they can offer their stock to anyone they want if they follow the
rules like thousands of other companies do. Trying to dodge those rules is
what got them the media attention. You can argue over the usefulness of those
rules, but Facebook (with the help of GS) is pretty clearly trying to subvert
them.

I think it's a case of trying to be a tad too clever. It reminds me of
Google's more successful attempts at an unconventional IPO.

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true_religion
How is it a subversion to dodge US trading regulations by not trading in the
US?

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damoncali
The sole purpose of the entity they created was to allow more investors to
participate than the SEC individually allows. When doing so attracts world-
wide media attention, there is little difference between that and publicly
selling the stock of a private company, which is not allowed.

They were doing this in the US before everyone said "WTF? Isn't that illegal?"
It was a fine line GS was was walking (surely they expected and were counting
on some hype), and it appears that it worked a little too well.

Edit: clarified.

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edge17
anyone interested in buying this knows how to set up shells outside the US.
This is probably just to help them get around rules that the US govt is trying
to impose on them. I'm sure GS will happily assist their clients in setting up
the shells as well.

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radicaldreamer
Goldman is expert at following the letter of the law while violating the
spirit of the law. They have enough expertise and talent at their disposal to
know exactly where the line is and take advantage of it's placement.

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fredliu
I'm no financial regulation expert, but does this mean that by offering FB
shares only to non-US clients, GS can prevent Facebook from having to disclose
its financial results to the public? Does the disclose-your-finance-if-
over-499-investors rule only apply to US investors?
([http://finance.fortune.cnn.com/2011/01/03/what-does-
goldmans...](http://finance.fortune.cnn.com/2011/01/03/what-does-goldmans-
investment-in-facebook-mean/))

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Yaa101
Haven't we seen this recently from Goldman Sachs?

This tells me that Goldman Sachs is going to hedge the stupid foreigners with
their US clients... Again.

Like they hedged the stupid poor homeowners.

I would stay far away from these creeps if I was a foreign investor.

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jacoblyles
Sounds like pretty arbitrary regulation. Does anybody know in particular what
laws Goldman would be violating by offering to US investors?

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patrickgzill
Is GS a US-based company, or not? How do they get to pretend they are outside
the SEC's jurisdiction?

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anamax
> How do they get to pretend they are outside the SEC's jurisdiction?

The SEC only has jurisdiction over US securities activities. GS is capable of
doing securities activities outside the US.

This sort of thing is not unique to securities.

Consider pharmacuticals. Certain drugs may only be dispensed in Japan under
prescription while others are complete banned. Some of the former are over-
the-counter in the US while some of the latter are prescription-only in the
US. A Japanese pharmacutical company is bound by Japanese law wrt production
in/export from Japan but is not bound by Japanese law wrt distributing drugs
in the US, even if they were made in Japan.

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patrickgzill
The SEC has continued to expand on what it considers its jurisdiction to be.

For example, see this article (section on "extra territorial jurisdiction"):
[http://www.mondaq.com/unitedstates/article.asp?articleid=107...](http://www.mondaq.com/unitedstates/article.asp?articleid=107216&email_access=on)

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bigwally
The entire facebook share thing is starting to look like a big ponzi scheme.

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smogzer
Is face-ville a ponzi scheme ? well i doubt they have 500 M verified accounts.
Just my GF created about 10 acounts for exchanging farmville items between
each other.

And other persons are creating accounts for their pets !

Ponzi it the Man of the Century, he enabled the service "industry".

