Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, January 5, 2011

SEC Looks Into Goldman-Facebook Investment

The Wall St. Journal  reports that the SEC has begun an investigation because of Goldman Sach's plan to create an investment vehicle that will allow perhaps hundreds of investors to invest in Facebook without requiring the company to register with the SEC.  Under section 12(g) of the Securities Exchange Act, companies that have fewer than 500 record holders are not subject to the periodic reporting requirements, and Facebook has been careful not to go over this number.  While creating an investment vehicle seems an obvious attempt to evade the registration requirements, the statute explicitly refers to record holders and thus calls into question the authority of the SEC to close this loophole without statutory amendment.  WSJ, Facebook Deal Spurs Inquiry

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