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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.'"
ARE WORTHLESS!
"Flyin' in just a sweet place,
Never been known to fail..."
only reasonable explanation. Looks like they may be screwed any way though.
http://i.imgur.com/Q7S47.jpg
Nuff' said.
We should remember this next time these assholes want a bailout.
Should have let them fail. Then they wouldn't be lending to any investors. If you want our money be ready to play by our rules.
The SEC has all sorts of regulations meant to "protect" the public. Goldman-Sachs is just trying to obey them.
We bail you out of from your greedy stupidity and this is your thank you? Looks like someone needs their corporate charter revoked.
...are now too good for them?
Man if that doesn't spell out the textbook definition of pretentious cocksucker, I don't know what does...
I didn't know American Citizens spelled check as 'cheque' unless I happened to be sleeping that day in school when we reverted back to British Spellings.
Basically they think that offering it to us based investors may break a securities law. While they might be lying, it should have at least been in the summary.
Well.. maybe. Or Maybe not. But Definitely not sort of.
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.
The ______ Agenda
They are just covering their asses, the Facebook IPO is just a scheme, so the guys that started it can cash out and run. By offering it only to 'investors' outside the US, they limit their exposure to law suits and shit....
Absolutely. To avoid expensive lawsuits when it turns sour. And to evade investigations from the US regulators. Very prudent indeedy.
For justice, we must go to Don Corleone
From the past couple years, Id say if anyone gets the screwing by corporations and the government, it's the American Citizen, not the corporation. I'd say they have some sort of idea that Facebook has some sort of nasty liability (like not being worth nearly as much as they claim) that will cause them to get into more trouble like Goldman was at the start of the Economic Crisis.
I'm one of those evil immigrant types come to take your jobs and your women.
Be gone from my sight or prepare to feel my flaming wraith!
Have you seen our women?
If you can afford to feed one, you can have one.
Is anyone else noticing that all of those subhuman corporate entities and economists have been freaking out a lot lately? Making weird decisions, hiding under the table, chasing their tail, moving investments out of the US? I think they sense some incoming disaster that we humans wont see until its too late.
What Goldman was doing was essentially illegal in the US. Facebook is a private company and without opening it's books such a company can't take on more than 499 investors. To skirt this requirement Goldman was acting as a single "investor" but actually just planned to sell shares of it's stake on to it's clients (with hefty commissions). This is a violation of the spirit and possibly the letter of the law, and the SEC stepped in. To take the heat off Goldman is now going to run their scam outside of the US where presumably it's legal.
And yes, this probably is a scam. There are good reasons not to allow public investment in opaque ventures whose value can't be determined, and Goldman is clearly banking on charging oversized commissions because it's selling a product you can't get anywhere else (cause it's illegal, hmm). The first investors will make loads of cash just like in any pump and dump scheme, the suckers will get rolled. The Facebook guys get to cash out, turning some of those pretend billions into real dough before the company goes Myspace. Worthwhile tech ventures will go underfunded and even larger numbers of (dumb) investors will lose confidence in the markets.
This actually sounds pretty plausible. Remember that Facebook is a company that is valued at more than 50 billion USD, yet pulls in 500 million yearly in revenue. If it turns out that Facebook is a bubble, GS and Zuckerberg might be able to cash out quick before the stock price cashes and burns, and not have to worry about any pesky insider trading or fraud investigations being brought up by the SEC. Remember that the holdings company GS set up for Facebook is registered in a generic foreign island tax haven country.
No, they are saying that the US has too many laws that bar advanced scams with securities, hence it is not very profitable to run such scams in the US.
But don't worry - it is very likely that whatever offer was going to be made would have excluded small investors outright; and that those US investors that would have been asked to consider buying into the fund have the offshore units that will allow them to do so now.
Before everybody goes all gung-ho against G-S for this move, think of how many of you would also comment along the lines of "Who would invest in Facebook? It is just another bubble waiting to burst." I'm not qualifying anything there doing, I'm just sayin...
'We are trying to prove ourselves wrong as quickly as possible, because only in that way can we find progress.' RPF
If you saw what I came from you'd understand :)
Be gone from my sight or prepare to feel my flaming wraith!
They do seem to like my enormous British...vocabulary.
Be gone from my sight or prepare to feel my flaming wraith!
And of course the post is immediately accompanied by the normal GS-bashing. Hate GS all you want, but this is a tangible example of the US losing its competitiveness to other jurisdictions due to its complex and outdated regulatory regime. Investment opportunities that could have been had by US investors will now go to foreigners. And yes many people think FB is overvalued, but that should be a personal investment decision, not something the government decides for you. This trend will make it increasingly difficult for companies to raise capital in the US. Not a problem for FB as they can source from anywhere, but smaller shops should definitely be concerned by this. And now back to the GS Is Evil channel...
Maybe it's the opposite. Who knows? Maybe they actually think they woefully overvalued Facebook and decided they only want to screw over the foreigners.
"It is a good thing for an uneducated man to read books of quotations..." -Winston Churchill
I think this is the likely scenario. Cue the cries of "Goldman Sachs is plotting to screw Joe the Inverstor over." Here's my advice to Joe: Don't buy into Facebook, and let GS lose out from being unable to find anyone to dump it to.
"It is a good thing for an uneducated man to read books of quotations..." -Winston Churchill
Goldman-Sachs is just trying to CIRCUMVENT them.
There. Fixed that for you.
The SEC regulations for offering shares to US investors are a lot stricter than for non-US. My guess is that they cannot meet the requirements, which I would take as a big red flag that Facebook is severely overvalued right now.
And, they probably -are- protecting the public in this case...companies should not be allowed to sell shares to the public without disclosing important information about themselves.
Maybe this is the future growth export industry in the US: securities fraud of foreign nationals.
"It is our blasphemy which has made us great, and will sustain us, and which the gods secretly admire in us." - Zelazny
100x earnings... yeah, no bubble here.
You mean below fair market value interest. You see those loans were given because the banks needed to borrow money and could not, because they did not want to pay enough interest. You can always get a loan if you pay enough interest. So any loan given was below market levels, meaning the difference was a free giveaway to the banks.
Is they don't want to be nailed for selling junk stock when that house of cards they call Facebook comes down. Meh no bfd they can keep their stock thanks anyway. I'm not some prolific investor but I prefer to invest what little money the government hasn't stolen from me in a real stock with a tangible value.
"We are just a war away from Amerikastan. When god vs god the undoing of man." Dave Mustaine
A banker with a conscience? Hahaha that's the best joke I've heard all night.
Seven puppies were harmed during the making of this post.
what you came from is so fat that its attraction force becomes repelling due to overflow.
In theory there is no difference between theory and practice. In practice there is. - Yogi Berra
If it turns out that Facebook is a bubble[...]
If?
I have to wonder -- given their past behavior -- if GS is juggling its various independent business entities so that one entity can offer the IPO while another entity shorts the motherfucking hell out of it. The actual reality would undoubtedly be more complex than the non-gnome population could readily understand, but I wouldn't be surprised if, once all the layers of obfuscation are peeled away, that's what it boils down to.
In any case, Facebook really doesn't have a whole lot of room to grow, and it's ripe to be friendsterized by someone in the next wave of social networks. Live by the social trend, die by the social trend.
Proud member of the Weirdo-American community.
You are wondering?
I would be willing to guarantee they are doing something like that.
The SEC has all sorts of regulations meant to "protect" the public. Goldman-Sachs is just trying to obey them.
LOL... Having been suckered into too many IPOs I agree. Thanks for looking out for us Goldman!
Seriously people, why would you want to buy this? Zuckerman and friends are multi multi millionaires. They did it pretty much by starting with nothing. This is just their chance to cash out before the thing heads south. If they saw much more upside, would they be selling?
Sig Battery depleted. Reverting to safe mode.
Well, think of it this way. Once all the foreigners have been screwed over and are dead-broke, the dollar might be worth something again.
See? G-S is just doing what's best for America. ;)
~REZ~ #43301. Who'd fake being me anyway?
This is what I find really worrisome. As a regulatory body, the SEC is kind of a joke. The bankers can and do get away with almost anything. For GS to exclude the US from the Facebook offering, this has to be a screwjob of such magnitude that even the SEC would have to act.
FB is wanting to stay as private as possible. Nothing wrong with that.
I find the irony of FB (and Mark Zuckerberg) not wanting the public to know much about the companies financial information amazing. If only they cared about their product (aka the users) the same way.
To be fair, I think Canada and Mexico have lasted quite a bit longer than a week or two.
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There is a special place in hell for these SOBs.
Congress?
Science advances one funeral at a time- Max Planck
I contend that for any of G-S' target US customers, moving the sale outside of the US is meaningless. The sale was aimed at high net-worth individuals, and just about any of these people (or their portfolio manager) will be able to participate via their off-shore accounts. The action in the usual off-shore banking establishments, or even through US citizens' above board overseas accounts, will probably prove heavy.
This action is strictly to put off the day of reckoning with the SEC.
Luke, help me take this mask off
What it is is a scheme to get our taxpayer money which we bailed them out with last years out of the country. They invest in a big bubble once more, this time with their bailout money, invest in it from outside the country using shills (so it can't get scrutinized by the local authorities) and then bust the bubble after transferring out all the cash.
Custom electronics and digital signage for your business: www.evcircuits.com
And, they probably -are- protecting the public in this case...companies should not be allowed to sell shares to the public without disclosing important information about themselves. Maybe this is the future growth export industry in the US: securities fraud of foreign nationals.
Yes we've heard this story before. Wallstreet used to export a very clever but very volatile financial instrument called a Mortgage-Backed-Security to the Europeans banks (and anyone else foolish enough to buy them). Wallstreet made lots of money in fees on those deals, and I suppose made the Europeans banks lots of money for awhile. Well until the underlying US mortgages went bad in 2007, and then the European government had to step in to keep their banks solvent.
How long before someone puts out a list of their executives names and addresses along with their offshore bank accounts that they use to hide money from the IRS?
Oh wait...
You might want to mention this story the next time someone tries to blow some "supply-side economics" smoke up your ass. "Trickle-down" indeed.
You are welcome on my lawn.
To: Ugandan Upper-class houshold Dear Sir or Madam, I am a Goldman Sachs Broker in the United States of America. We have been fortunate enough to aquire many millions of dollars in private Facebook stock, but because of govt. red tape, we cannot sell it here. If you would be kind enough to put 25000 in a foreign account and give us that info, we can make sure you get in on this once in a lifetime opportunity! Your American counterparts, Goldman Sachs
You've got to do a lot more than that. These shares are probably not going to get to the retail brokers at all. They'll get divvied up between the big banks and the investment houses to be distributed to their most favored customers.
I can pretty much guarantee that whoever you are, you are not one of their "most favored" customers.
You are welcome on my lawn.
Why would you want to buy this? I'll tell you why: Because that first week or so the sheep will cause the price to shoot like a rocket (because they have heard of FB and know it is big) before it crashes hard when reality sets in. Kinda like how you can make a mint on a "pump and dump" if you get in at the bottom and drop them right before it starts to freefall.
But frankly when I hear the words "evil corporation" I automatically think GS. They are the kind of slime that ruin everything they touch while engorging themselves at the same time. Look at their history and you'll see bubbles as far as the eye can see going back almost to its foundation. Frankly the best thing we here in the US could do for the world is dissolve GS and throw as many of those swindlers under a jail as possible, but sadly our government is riddled with GS "alumni" that make sure their beloved GS ALWAYS comes out ahead. GS is living proof that even after 200 years the words of the great Thomas Jefferson still ring true. How sad that all those years ago he could see the truth when so many today simply bury their heads in the sand and scream "free market!" as the answer to all of the USA's ills.
ACs don't waste your time replying, your posts are never seen by me.
It wasn't the "European banks" that got hurt from the mortgage-backed bunkum. They were made whole to the tune of 100 cents on the dollar. The people who are paying for it are the same ones that are paying for it over here. You and me. Our parents. Our kids.
They are creating a "breakaway" culture, who within decades will be the only ones with access to capital, to new technologies, to advanced health care. That's the ultimate effect of the dramatic increase in wealth disparity. Fifty years of this and they'll be as far ahead of the rest of us as the American settlers were of the Native Americans. When two cultures exist side-by-side and one is so far in advance of the other, it doesn't work out well for the ones on the bottom. We are seeing evolutionary branching based on wealth alone.
You are welcome on my lawn.
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.
Maybe this is the future growth export industry in the US: securities fraud of foreign nationals.
Well they basically spent the last decade exporting fraudulent debt, so it seems like a logical progression...
To be an effective trader, basically what you do is step in to a transaction between two people and shove them far enough apart that they can't communicate. Then you go to the seller, tell them that you and your buddies are their only market and you will pay them $XYZ for everything they have. A real low-ball figure. Do your best to put them in the fucking poor house.
You then take whatever you bought to the person who was already interested in buying it, and tell them you and your buddies are the only source for whatever it is you bought, and if they want any of it they'll have to pay you $XXYYZZ. An absurdly overvalued figure. Do your best to put them in the fucking poor house.
What's going on is that traders at no point are about facilitating exchanges between two parties. Every step of the way, their goal is to screw everybody who's still holding a single red cent so hard that their fillings fall out, and then collect those fillings -- gold, too, is an investment.
... still waiting for this free-as-in-beer free beer I keep hearing about.
I bet 100% of the investors are going to short that stock big time. No way I am buying into the eventual public IPO.
When Facebook goes public, it will the very definition of a bubble. The company's tangible physical assets are probably less than $500 million. In some objective sense, they are measuring value based on the actual number of Facebook users.
This means they are dependent upon the interest of users to maintain that value. So was AOL, so was Compuserve, so were a lot of other things that lost a lot of value in a very short time.
I get the same sense I did when I saw the AOL deal go through. WTF, this cannot be right. I can't tell you what kind of game changing, cataclysmic innovation is going to affect their value, but it's going to emerge.
How did this get modded +3? Criminal hiding of income by US citizens from the IRS has NOTHING to do with supply side economics or trickle down theories. If you don't understand the concepts, don't mod out your rear end.
NON-geek Linux user since 1998
100x earnings... yeah, no bubble here.
One hundred times earnings? Worse, actually. One hundred times revenue. They are probably barely making a profit at this point. Facebook isn't ready for an IPO at fifty billion dollars until it comes up with revenue on the order of two or three billion dollars a year, and profit of at least half that. Even then it might be a dodgy investment, but I have little doubt they could pull it off, IPO wise.
Sky's Alive, your post is the one.
I had a massive 4-part re-spin of your comment in flux, but then I wiped it for being too depressing. Let's just say this:
At the same time we're about to get a lot of "Everyone must sacrifice to pay down the debt" government rhetoric, the Gov bails out Goldman Sachs. Meanwhile Mr. Z. somehow convinces parents who decided to skip myspace that finally Facebook Is It, the place to post every personal detail they have. Remember the folks last week who wanted to make it the internet passport?
Then American company Goldman Sachs takes the US Taxpayer bailout money and uses it to float foreign shares of American company Facebook holding the lives of millions of Americans, while denying US taxpayers the right to buy the shares of the company they put their lives on.
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
Except wrapped up in this Kelin-Bottle mess is that Facebook managed to be the first non-email company to convince "Middle America" that they should put their whole lives on it, "because everyone is doing it". So one day when Facebook goes wrong, that database will be the biggest identity theft risk ever known.
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
The real point is the fact Facebook actually has no real value.
Nice scam.
And, they probably -are- protecting the public in this case...companies should not be allowed to sell shares to the public without disclosing important information about themselves.
Maybe this is the future growth export industry in the US: securities fraud of foreign nationals.
Future growth industry? Dude, in the industry everyone knows not to touch US onshore investors. It's too messy in terms of documentation, and it gives the SEC powers to look at your investors from other countries. Everything US is done via offshore entities to prevent this. I'm surprised everyone thinks this is news.
I'm all for capitalism, but regulations exist for a reason... usually as a reactionary measure to massive abuse.
In this case, they're right. The valuation is ridiculously excessive relative to their annual revenue, and I fail to see how being deprived of getting scammed is destroying America. Does anyone honestly think Madoff getting busted was a threat to liberty? It's a bit sad we let them take foreign investors like that, but hey, I guess that at least benefits the US economy, right?
I also find it quite ironic that a company that has abused end-user privacy so casually expects a great deal of privacy for themselves.
Of course if the lower end still has access to freedom and plenty of bomb making materials life can get annoying for the upper culture if they try to push this too far. Also with the exception of the dynastic families not all rich people think it's a good idea ... the forces on government might all be monied, but they are not of one mind.
Also in a democracy it takes an awful lot of propaganda to keep such a system in place ... it only takes one FDR to unwind decades worth of private debt and turn the clock back.
Facebook is going south and everyone knows it. Its not about if, its about just how long it stays up before the novelty wears off and people migrate to the next big thing in masses. Facebook is a fun trainwreck to watch just as Second Life was when some stupid idiots paid millions to create even virtual embassies. Log in to Second Life and take a look around, thats the kind of desolate landscape Facebook will be shortly.
Anyone buying stock in Facebook deserves to part from their money.
HTTP/1.1 400
Let's remember that "supply-side" economics has been the approach of BOTH Dem and Repub administrations since Reagan, even in the face of its complete failure.
Complete failure for who exactly? Depending on your perspective it could be considered a resounding success.
The pool of fools to dump this crap on has shrunk by more that half by excluding US people. So their fees are that much less plus IPO price will be less since there is lesser demand.
Somehow I do not feel bad for US persons. :-)
goldman sachs hasn't been prosecuted to the fullest extent of the law because they're in collusion with their operatives in the white house. check out the resumes of the executive branch, and you'll find a bunch of ex-goldman sachs employees (who likely still have stock in that evil, horrible place)
Remember kids, if you're not paying for the service, YOU ARE THE PRODUCT THAT IS BEING SOLD.
Why would you want to buy this? I'll tell you why: Because that first week or so the sheep will cause the price to shoot like a rocket (because they have heard of FB and know it is big) before it crashes hard when reality sets in. Kinda like how you can make a mint on a "pump and dump" if you get in at the bottom and drop them right before it starts to freefall.
To be fair, a lot of slashdorers said the same thing about Google. Going public at $85/share was clearly a crass attempt by the insiders to cash out before the imminent crash, and everyone who bought at that price was hoping to resell quickly to the sheep because everyone knows there's no profit in ad-supported web sites.
0 1 - just my two bits
Why would you want to buy this? I'll tell you why: Because that first week or so the sheep will cause the price to shoot like a rocket
They cannot sell before 2013. These sheep *are* the suckers; whats amazing to my horribly uncomplicated mind is how anyone can think this is a good deal (what with the excessive 4.5% fee's, and cropping an profit (but not the losses) to 95%).
I'm a minority race. Save your vitriol for white people.