Goldman Sachs Says No Facebook Shares For US Investors

theodp writes "In 2009, Robert Cringely speculated that the day might be coming when Goldman Sachs decides the United States isn't worth dealing with anymore. Crazy, eh? Maybe not. Blaming 'intense media attention,' Goldman Sachs has decided to exclude US investors from a $1.5 billion Facebook offering. In a nicely-timed all-investors-are-not-created-equal MLK Day statement, the US taxpayer bailout beneficiary said, 'Goldman Sachs decided to proceed only with the offer to investors outside the US....We regret the consequences of this decision, but Goldman Sachs believes this is the most prudent path to take.'"

Comments

A Way To Get Around Regulations

[cgenman]

The US has disclosure rules that protect investors in companies that have more than 500 investors. Goldman Sachs is creating a scheme where they are the singular investor, but then other investors buy into their shares of Facebook. This prevents Facebook from having to disclose certain information that is considered critical in deciding to invest in a company or not, and allows them to sell shares without informing the public about what they're buying.

This has been on the SEC's radar as potentially totally illegal, as it pretty blatantly is designed to get around this particular rule. The rule is there to protect small investors, and help create a more fair, less manipulated playing field.

Quite frankly, whatever Facebook will become in the future, the current valuations are crazy. This is protecting US investors from taking a bath, as the rule was intended to do in the first place.

Re:A Way To Get Around Regulations

[antifoidulus]

Yeah, they paid us back largely with our own money. One of the biggest scams ever in the history of the united states seems to go largely unnoticed by the average man. While most of us are, legitimately might I add, up in arms about the bailout loans the much more sinister part of the baillout was the preferential interest rates banks got selling us our own debt. Essentially in order to spur lending the Fed was loaning money, with no strings attached of course, to banks at something like less than .25% APY. The banks, instead of lending the money opted instead to buy the very bonds that were issued to fund the loans and were getting about 2% APY on them. So essentially the bank was borrowing money from the Federal government at -1.75% interest, and the more they borrowed the more bonds were issued the more they could make. This was theft on almost unimaginable scales and yet it was completely legal! Its just fucking disgusting that they can pull this kind of shit, and hardly anyone complained. And yet you or I cannot get a -1.75% interest loan from the Fed. Only the uber rich are allowed to get them....fucking sick....

Re:Exodus, anyone?

[Anonymous Coward]

Ah, the day I deleted my facebook account, one of the most liberating things I have ever done.

It's a bit presumptions how they:
1) Assume you would rather "deactivate" your account (making it functionally identical to an active account AFAICT) and make you google for the actual "delete your account" link
2)Require a 2 week "pending deletion" period, during which if you log in you will cancel your request for account deletion.

Still, inconveniences aside, I would recommend account deletion to everyone. No longer will you receive dozens of invites a day to banal "spam to click" games from people you barely knew in school, no longer will you miss birthday drinking sessions because you were only ever informed via facebook (all e-mails from which going straight into your "failbook spam" folder) and no longer will you get hassle from the Mrs. when she finds out you accepted a friend request from a girl you used to date 15 years ago.

Free yourself from the tyranny of social retards today!

Re:Your fancy US Dollars

[flaming error]

Your 2008 link has a misleading headline. The article quotes him as saying

"If our current account deficit keeps running at present levels, the dollar I think is almost certain to be worth less five to ten years from now compared to other major currencies,"

but the article headline misleadingly quotes him saying "worthless".

So to be fair to Mr. Buffett, "worth less" != "worthless"

Having said that, hopefully everybody here understands that a "dollar" has no intrinsic worth, nor is it backed by anything of intrinsic worth. So it is literally "worthless", but as long as people trade goods and services for it anyway, the great ponzi scheme goes on...

Re:In my yard

[LibRT]

Yes - this explanation is spot-on. It's purely an attempt to avoid the decision by the SEC that the NYT article of Dec 2 (if I recall) about the offering constitutes a prospectus or is marketing (ie intentionally leaked by GS). Also, I'm pretty sure this offering is limited to a few high net worth individuals/hedge funds/etc, because Zuckerberg et al need to keep the number of public shareholders at or below 499 to avoid having to make a whole bunch of public disclosures and comply with other US regulatory nonsense designed to protect people from themselves.

Re:Your fancy US Dollars

[causality]

I can't tell if you're trolling or not. The worth of all forms of money has always come from people being willing to trade goods and services for it. Do you think the Sumerian clay tokens representing sheep and cows had intrinsic value? No, they were worth the sheep or cow someone had agreed to trade for them.

It's the difference between a fiat currency and a representative currency. The worth of the representative currency is determined by the amount of a real physical asset that is available.

The real difference is that there is a way fiat currency is commonly abused that doesn't happen with representative currency.

There is a built-in unsustainability caused by the private companies that issue fiat currency, like the Federal Reserve. When they create fiat money out of nothing, they loan it to the US Government in exchange for what is basically an IOU from the US Government. But they attach interest to each dollar they create. That means there are not enough total dollars in the system to pay back all of the debt. Therefore, the US Government cannot possibly pay back its debt. It can't ever do that, not even if the total federal budget were less than the tax revenues, because the money is loaned at interest the moment it's created.

The US Government has to borrow more money from the Fed, at interest, to make payments on the existing interest. Therefore, not only can it never get out of debt, the debt must also continue to increase.

Thus, fiat currency dollars don't represent wealth. They represent debt. If all debts were somehow paid off then there would be no money in circulation.

Even money backed by gold and silver, and gold and silver themselves, are valued more highly than their intrinsic worth: they are demanded as media of exchange far above the demand for them for use in jewelry, electronics, et cetera, and the market bears a price for them far higher than if they were only valued for their intrinsic properties, in exactly the same way the market bears a higher price for US dollars than for the paper and ink that dollar bills are printed with.

The difference is that representative currency dollars directly represent a specified amount of a tangible asset. They can be redeemed for that amount of that asset at any time. Their value cannot be lower than the value of that tangible asset. They represent wealth, not debt. If all debts were paid off under that system, you'd just have a lot of happy creditors. It's an inherently stable and sustainable system that doesn't require large amounts of built-in debt.

Unless some alchemists find an easy, dirt-cheap way to transmute worthless materials to gold, silver, or whatever the currency represents, then it has a value that can't suddenly disappear the way fiat currencies can (and have, several times throughout history).

If you were wondering how bad the deal is

[LeperPuppet]

This article gives an overview of what Goldman Sachs will be giving investors and it isn't pretty.

The investor needs to put in at least $2mil and GS will take 4.5% in fees and another 5% of any profit earned. The real kicker is the investors can't sell until 2013, while GS reserves the right to cash out whenever they want without giving any warning. If the share price drops, GS will happily bail out, leaving their customers holding the bag. Again.

Overall it's an awful deal, unless you have a lot of cash to burn and somehow think that the Facebook of 2013 will be worth more than its currently overpriced 2011 version.