US launches probe after Goldman

investment in Facebook

Presented by:-
Yashupriya
 Facebook
• Facebook is a social network service and website launched in
February 2004 that is operated and privately owned by
Facebook, Inc.
• Facebook was founded by Mark Zuckerberg with his college
roommates and fellow computer science students Eduardo
Saverin, Dustin Moskovitz and Chris Hughes.
• The fast-growing Facebook website has more than 500 million
active users per month worldwide as subscribers "friend" their
contacts and share their activities. Its founder Mark Zuckerberg ,
26, recently named Time magazine's "Person of the Year," has
resisted pressure to launch an initial public offering of stocks
 Facebook Inc.
Type Private
Founded Cambridge, Massachusetts
Area served Worldwide
Key people Mark Zuckerberg (CEO)
Chris Cox (VP of Product)
Sheryl Sandberg (COO)
Revenue  US$800 million (2009)
Employees 1700+ (2010)
Website facebook.com
Type of site Social network service
Banner ads, referral
Advertising marketing, Casual games
500 million (active in July 2010)
Users
Available in Multilingual
 The Goldman Sachs Group, Inc.
• The Goldman Sachs Group, Inc. is a global investment
banking and securities firm which engages in investment
banking, securities, investment management, and
other financial services primarily with institutional clients.

• Goldman Sachs was founded in 1869 and is headquartered at

200 West Street in the Lower Manhattan area of New York
City, with additional offices in major international financial
centers. 
 The Goldman Sachs Group, Inc.
Type Public 
Banking
Industry Financial Services
Marcus Goldman
Founder(s) Samuel Sachs
Area served Worldwide
Investment banking
Prime brokerage
Investment management
Commercial banking
Products Commodities
Revenue  $51.673 billion (2009)
Operating income  $19.829 billion (2009)
Net income  $13.385 billion (2009)
Employees 35,400 (3Q 2010)
Website GS.com
 US launches probe after Goldman
investment in Facebook
• US media earlier this week said that investment giant Goldman had
poured 450 million dollars into Facebook and that a Russian investment
firm, Digital Sky Technologies , sank another 50 million dollars into the
social networking site
• With this reported fresh investment, Facebook has a bigger capitalization
than Boeing , at 48.7 billion dollars, or Time Warner , about 36 billion. Yet
its annual revenue, primarily based on advertising, is estimated at two
billion dollars, compared with Boeing's 64.62 billion and Time Warner's
26.5 billion.
• Goldman’s investment values Facebook, founded by 26-year-old Harvard
dropout Mark Zuckerberg just six short years ago, at an astonishing $50
billion. Zuckerberg himself is now worth about $15 billion — on paper at
least — cementing his elite status as one of the richest men in the world.
• This investment of nearly half a billion dollars into
Facebook has spawned a probe by US regulators eager to
safeguard the dividing line between public and private
companies
• The private-wealth unit is planning to create a special-
purpose vehicle for its clients to make additional
investments worth as much as $1.5 billion.
• The participants in Goldman’s Facebook “special purpose
vehicle” would not be considered Facebook owners “of
record,” but rather “beneficial” owners. In other words,
for the purposes of the Securities Exchange Act,
Goldman’s Facebook “special purpose vehicle” would
constitute one owner “of record,” no matter how many
Goldman clients participate.
• The basic disclosure issue surrounding Goldman’s investment is that
Section 12(g) of the Securities Exchange Act of 1934 — amended by later
SEC rule-making — requires companies with assets exceeding $10 million
and equity held by more than 500 people to register its securities with the
federal government.
• At that point, the SEC’s transparency rules kick in, requiring the company
to provide greater financial disclosures to the public even as it remains a
private company not subject to a raft of other transparency requirements.
• The law and subsequent rule-making was designed to protect average
investors from losing money betting on companies that aren’t held to the
same strict disclosure requirements as public companies.
• Thus, it would appear that Goldman Sachs and Facebook are attempting
to avoid SEC disclosure rules and allow Facebook to remain private for as
long as possible, but still make it easy for Goldman’s rich clients to invest
in the company.
• SEC rules require firms with 500 or more shareholders of record in a given
type of stock to publicly disclose certain financial information. The
requirement is designed to protect investors from risking money on
companies that say little about their operations and performance. 
Thank You