Goldman to Exclude US Investors From Facebook Offering - CNBC

Goldman Sachs will disappoint U.S. investors hoping for a much-coveted piece of the social networking giant Facebook.

Citing “intense media coverage” and concerns over the investment’s adherence to securities laws, the bank said in a statement it would restrict the offering to offshore investors only.

"Goldman Sachs [GS 175.00 3.43 (+2%) ] originally intended to conduct a private placement in the U.S. and offshore to investors interested in Facebook,” Goldman said in a statement released Monday. The change to the transaction had been reported earlier by the Wall Street Journal.

“The transaction generated intense media attention following the publication of an article on the evening of January 2,” added the statement. “In light of this intense media coverage, Goldman Sachs has decided to proceed only with the offer to investors outside the U.S.”

The move comes just weeks after Goldman approached its top clients with the offer to own Facebook shares via a $1.5 billion private offering. That capital raise came alongside a private investment of $450 million by Goldman itself, which, alongside the Russian investment firm Digital Sky Technologies, had helped Facebook raise $500 million in a deal that valued the networking site at some $50 billion. Those efforts were first disclosed in an article in the New York Times’s DealBook on Jan. 2.

By design, Goldman’s investment was structured to keep the total number of Facebook investors under 500 – any higher, and the social networking site would be required to file public disclosure statements with the Securities and Exchange Commission. Whether or not the deal was explicitly designed to evade securities laws has loomed large for Goldman – especially coming less than a year after an embarrassing lawsuit by the SEC that centered on whether the firm had skirted investor disclosure laws.

In its statement, Goldman said the decision not to proceed in the US with the Facebook offering was a decision it made on its own, and was not the result of any requests by a third party.