Academic

I had a late night/early morning last night, so forgive me if I'm sounding a bit giddy.  But I predict that Facebook will offer a series of teachable moments this semester. 

For those not following this story, Goldman Sachs has created a special purpose vehicle to invest $1.5 billion in Facebook.  Yeah, this means a sky-high (too high?) $50 billion valuation for the company, but corporate law types are more interested in Goldman's legal innovation, a gambit it's taken to avoid the 500-shareholder rule.  The SEC requires companies with over 500 shareholders to disclose so much information that most wind up just going public and being done with it.  This requirement drove behemoth tech IPOs like Google's. 

The big question is whether the SEC will buy the argument that the Goldman vehicle should count as 1 investor.  Davidoff says a thoughtful no, and Larry Ribstein blames the regulation.    My money is on the SEC squelching Goldman's innovation.  Even though there are several ways for you to invest in FB, should you care to, the sound-bite version of their argument is that if you're a Goldman client with $2 million to pony up, you get in on the ground floor while the rest of us have our nose pressed up against the window.  And that just doesn't fit with the notion of a level investing playing field. 

No matter what happens, though, I get to talk about what it means to be public, why a company might want to stay private, valuation, legal innovation and other fun stuff.  Hooray!