New York – After offering the opportunity for its wealthy
U.S. client base to invest in Facebook, Goldman Sachs has rescinded that offer,
opting to restrict the offering to foreign investors so it can avoid breaching
U.S. securities laws, The Wall Street Journal reported. In connection with a
$500 million investment deal that gave Facebook a $50 billion valuation,
Goldman said it would raise an additional $1.5 billion for Facebook by courting
its client base for investments.
Last week, reports emerged that the Securities
and Exchange Commission (SEC) was investigating Goldman’s Facebook investment
opportunity — which was reportedly already oversubscribed.
Goldman said in a
statement that it had "concluded the level of media attention might not be
consistent with the proper completion of a U.S. private placement under U.S.
law," which prohibits advertising or promotion of such private placements.
The rescinding of its Facebook investment offer could reportedly "damage
Goldman’s ties to some of its most lucrative [U.S.] clients," The Journal
However, The Journal also noted that had the SEC deemed the deal
improper, it could have forced Goldman to repurchase all the shares it sold, or
force Facebook to immediately begin reporting financial results in its public
(DMW previous coverage)