Goldman Sachs said it will limit its private placement of shares of social networking site Facebook to investors outside the United States, citing "intense media coverage," according to the investment bank. "In light of this intense media coverage, Goldman Sachs has decided to proceed only with the offer to investors outside the US," the company said in a statement provided to Reuters.
Goldman began notifying clients of its decision Sunday night in Asia, and clients in Europe and the United States were being told on Monday, the Wall Street Journal reported, citing people familiar with the situation. Goldman said the decision not to conduct a private placement of the shares of Facebook, a closely held company, in the United States was solely its own and was not required or requested by any other party.
Facebook plans to raise as much as $1.5 billion. It raised $500 million for Goldman Sachs and Russian investment firm Digital Sky Technologies, in a deal that valued the company at $50 billion. Several weeks ago, Goldman approached its best private wealth clients with an offer to take part in a special fund that will own shares in world's biggest social networking site. The deal would allow Goldman to offer clients a hot investment opportunity, while allowing Facebook gets to remain a private company.
But it also blurred the line between public regulated markets and hands-off private markets and has drawn the attention of the US Securities and Exchange Commission. Under US securities law, if a company's private shares are held by more than 500 holders of record, the company is required to register with the SEC and file public disclosure statements.
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