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goldman sachs tells US Facebook (share) shoppers "no".
- Thread starter Williebee
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I'm swayed just thinking of it. Here's some more news:
http://finance.fortune.cnn.com/2011/01/18/goldman-sachs-were-blaming-you-but-we-know-it-was-us/
The important thing about this story is that the SEC's draconian and irresponsible regulating is forcing this decision. I have to laugh. I hope more companies do IPO's like this. The only reason the IPO is happening in the first place is because the SEC says the Facebook has more the 500 investors now, so they have to start publishing all their financial data and conform to public company rules. Well, screw you SEC, we'll just make it public somewhere other than here.
The sad thing is a lot of those "investors" were Facebook employees. This SEC law makes it hard for company owners to share the wealth with employees by giving stocks and stock options in privately held companies. Yep, it's our government stepping in to save us all (from reaping rewards for our hard work).
Also, the article is looking at it from a biased perspective. Yes, they're doing it this way to avoid SEC probes, but not because they're hiding something illegal or immoral. It's because the SEC dictates how one runs a business once it becomes public. The rules, like SOx, are monumentally expensive to implement and totally counter productive in both producing a good product and serving your customers.
The reason this "secondary" market exists is because Facebook was nice to employees and offered them stocks. The employee wanted to make some money, so they sell that stock to somebody else. Then you have your "market". It has little to do with the company itself. Those shares would be non-voting shares anyway so there's no power in them.
The wording of that article makes me groan. It so distorts the context that it makes the facts sound totally different than what they really are. Thanks CNN for being so honest, ethical, and factual.
We are in the age where companies do not compete directly with each other. They do not compete at being better at making or delivering a product. They all compete on being better at complying with, avoiding, or manipulating government policy and that's OUR fault. It's non-productive and lowers our standard of living across the board. It wasted resources -- trillions of dollars worth every year. Gah, why did you get me started? Mow I'm going to have to drink scotch.
The sad thing is a lot of those "investors" were Facebook employees. This SEC law makes it hard for company owners to share the wealth with employees by giving stocks and stock options in privately held companies. Yep, it's our government stepping in to save us all (from reaping rewards for our hard work).
Also, the article is looking at it from a biased perspective. Yes, they're doing it this way to avoid SEC probes, but not because they're hiding something illegal or immoral. It's because the SEC dictates how one runs a business once it becomes public. The rules, like SOx, are monumentally expensive to implement and totally counter productive in both producing a good product and serving your customers.
The reason this "secondary" market exists is because Facebook was nice to employees and offered them stocks. The employee wanted to make some money, so they sell that stock to somebody else. Then you have your "market". It has little to do with the company itself. Those shares would be non-voting shares anyway so there's no power in them.
The wording of that article makes me groan. It so distorts the context that it makes the facts sound totally different than what they really are. Thanks CNN for being so honest, ethical, and factual.
We are in the age where companies do not compete directly with each other. They do not compete at being better at making or delivering a product. They all compete on being better at complying with, avoiding, or manipulating government policy and that's OUR fault. It's non-productive and lowers our standard of living across the board. It wasted resources -- trillions of dollars worth every year. Gah, why did you get me started? Mow I'm going to have to drink scotch.
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They're good for that, and I always toss back tequila at moments like this. It's the only way I stay "sociable" at the Fed.
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Thanks, particularly for this bit:
That also describes the state of education and competitive grants.
That also describes the state of education and competitive grants.
You need to define OUR a bit more precisely.
I've been arguing the bolded for years, and I've never asked government to set a policy about anything in the marketplace. I'm not takin' the rap, see? Let's do it Foxworthy style: "If you've ever argued for government intervention in the marketplace, it's your fault."
Otherwise, you're spot on.
I want government intervention in the marketplace.
Wise up, people: this is why you delete your Facebook account. Can't trust businesses with that sort of information.
Wise up, people: this is why you delete your Facebook account. Can't trust businesses with that sort of information.
Government, OTOH, never uses private information to screw over its citizens. And if they did, you could always go to court, and see if you could get a judge to rule against their own company.
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With respect, I've got to disagree. Congrats to the SEC for doing its job. If Facebook's trading valuation is $50 bn and it has however many shareholders it has, then it is effectively a public company and should be required to perform the same disclosures as any other public company.
I'll grant you that the disclosure process isn't thoroughly effective at preventing corporate fraud, but it's a hell of a lot better than no disclosure process at all. Yeah, hiring accountants and outside auditors is a drain on corporate profits, and no, they aren't entirely effective. But, I mean, is anyone seriously suggesting that shareholders would be better off without these requirements?
As far as facebook, I guess it's conceivable that they're actually worth more than Time Warner, but I have my doubts. My suspicion is that they know they're wildly overvalued at the moment, and are resisting opening the books for that reason.
No one's explicitly suggested this, but it's the only other alternative I see: I don't think it's conceivable that the dedicated libertarians at Goldman Sachs are placing principle above profit.
I'll grant you that the disclosure process isn't thoroughly effective at preventing corporate fraud, but it's a hell of a lot better than no disclosure process at all. Yeah, hiring accountants and outside auditors is a drain on corporate profits, and no, they aren't entirely effective. But, I mean, is anyone seriously suggesting that shareholders would be better off without these requirements?
As far as facebook, I guess it's conceivable that they're actually worth more than Time Warner, but I have my doubts. My suspicion is that they know they're wildly overvalued at the moment, and are resisting opening the books for that reason.
No one's explicitly suggested this, but it's the only other alternative I see: I don't think it's conceivable that the dedicated libertarians at Goldman Sachs are placing principle above profit.
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The articles I read all said this set of regulations is almost never enforced. It seems like rarely enforced regulations aren't very draconian.
It seems the PR angle was what the problem was. It looked like GS offerred the stock to a limited pool and then
GS planted a story to make its value go up. Apparently that was not exactly true, but it could be read that way. The limited pool and then a planted story could be seen as unfairly making a bundle for the limited pool by manipulating media coverage.
So it could look bad whether the SEC does anything or not.
Given that dedicated libertarians don't believe in government intervention in the marketplace, and most don't even believe the Federal Reserve is a legitimate exercise of government power, I doubt very seriously there are any "dedicated libertarians" working at Goldman Sachs.
I'd give you "pro-statist bloodsuckers hooked on using political influence to rob and pillage," though.
You know what I really hate about all those libertarians at Goldman Sachs? All those corporate bailouts they supported. And Tim Geithner. Don't get me started on Tim Geithner.
You know what I really hate about all those libertarians at Goldman Sachs? All those corporate bailouts they supported. And Tim Geithner. Don't get me started on Tim Geithner.
Did they support any bailouts? I thought they had to get bailed out themselves?
Oh, yeah, I forgot Geithner. Now there's a poster boy for libertarianism if I ever saw one.You know what I really hate about all those libertarians at Goldman Sachs? All those corporate bailouts they supported. And Tim Geithner. Don't get me started on Tim Geithner.
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Come on, greater that 500 stock holders (private stock btw, not public stock and stock that has no voting power or control over the company) is grounds to force a company to go public? The stock isn't even traded on an exchange. That's like saying since you sold some of your household stuff at a garage sale and then people who bought it from you resold it, that you are wholesaler and must pay corporate income taxes.
The main point here is that our government is forcing a company to go public against their will. The response is to go public off-shore. Is that really the result that is best for all of us?
The disclosure process is rarely effective in stopping fraud -- in fact, I would argue that it's effects are negligible in stopping fraud. If bad guys want to do something illegal, they'll figure a way to do it even with all those laws. Responsible companies waste trillions every year complying with this stuff. Irresponsible companies do not, make tons more money, and pretty much never get caught.
If you don't work for a publicly traded company and you're not involved with the rules, regulations, and limitations, that being publicly traded puts on you, then you have no idea how ridiculous these rules are. For example, I cannot give away updates to my software to my customers. I HAVE to charge for it even if I want to give the updates for free to my loyal customers. The SEC forces this on us with it's idiotic rules. I had to comply with it and I wasted engineering time, web development time, and lots of tech support time to implement it. The end result, my competitors who are private companies and off-shore companies now have a huge competitive advantage over me that I can't compete with, and my costs are higher than theirs so I can't hire more engineers to do more updates, so my customers have to pay to get less than they did before. And that's just one trivial example.
Plus, if you saw how arbitrary, malleable and onerous the rules are with regards to accounting and just reporting the financials, you'd realize that the disclosure stuff is far from accurate in the first place. And protect investors?? Come on. How many investors these days actually look at the financial reports? They all buy and sell off of trends. It's idiotic, but there ya' go. So anyway, I don't oppose financial reporting requirements too much, but that's just the tip of the iceberg, I can assure you of that.
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Rupert Murdoch owns half of it and now he uses all his media (Daily Mail, Fox etc) to slate Facebook for paedophilia and security and saftey issues. Hypocrite much. His media never report bad things about Myspace anymore.
Two things:
1) the government hasn't done anything at all in this case
2) these kinds of pre-IPO pseudo-IPOs are pretty rare. There may only be another 3-4 cases like this out there.