FACEBOOK could be forced to go public by the US Securities and Exchange Commission (SEC) after Goldman’s $500m (£320m) investment, which valued the online giant at around $50bn.
Goldman’s cash injection is to be structured as an investment vehicle and sold on to clients, who can then trade their stakes on secondary markets.
Goldman has given clients until the end of the week to decide whether they want to invest in the social networking firm, with an expected minimum investment of $2m.
The SEC watchdog is looking closely at secondary trading markets to see whether Facebook falls under a rule stipulating that firms with more than 499 shareholders must go public.
Experts are divided on whether Goldman’s vehicle will count as a single investor or create hundreds of new Facebook shareholders.
Facebook gained an exemption from this rule in November 2008 by arguing that most of its shares are held by staff, but it has not released details of all its investors.
SecondMarket, a platform that allows traders to exchange stakes in private companies, admitted yesterday that the SEC had requested information linked to secondary trading.
“We have now received a voluntary request for information from the SEC regarding ‘pre-IPO pooled investment funds’”, said Mark Murphy, a spokesman for the New York-based broker. “We are fully cooperating.”
The SEC declined to comment.
FAST FACTS | US PUBLIC TRADING LAW
The Exchange Act forces a company with $10m or more in assets to go public if it has 500 or more shareholders.
The rules allow some groups such as trusts to count as a single investor.