Goldman Sachs announced this week that it will exclude U.S. investors from the opportunity to invest in new shares of Facebook. Instead it will sell the shares exclusively to foreign investors. This has been portrayed as a victory for the Securities and Exchange Commission. And as Andrew Sorkin wrote in the New York Times, it is "considered a serious embarrassment for Goldman." It is the SEC that should be embarrassed.
Goldman's move shows how banking has become so international that companies can sidestep the SEC's rules with ease. It also shows that the commission's rules regarding stock sales are crippling for U.S. investors.
Facebook will raise just as much capital, $1.5 billion, as was planned originally. The terms of the deal are also the same: Investors will still put up a minimum of $2 million and commit to hold the shares until 2013.
Read Jonathan Macey’s Wall Street Journal op-ed…
(photo credit: arsheffield)
