There is a 1964 law that that once a company has over 500 shareholders it has to go public. And a public company has to disclose certain financial information by law. Facebook, as a private company wants to attract investors and venture capital but it does not want to reveal certain in-house information about its finances and doesn’t have to if it stays under the 500 shareholder rule. When the capitalist class talks of democracy and transparency, one place it isn't talking about is the business ledgers, their financial information. And even the areas they do talk about; it's just talk. In practice they keep from us whatever they can, that's why the exposures from Wikileaks is such a threat to them.
So what the United States of Goldman Sachs has done is create this “vehicle” a financial instrument (boy they use some terms for their finagling) which is really a pool of investors but as it is structured acts as one single investor. Naturally, Goldman’s clients will get a golden opportunity to make some cash here. To get Facebook shares they have to invest a minimum of $2 million and agree not to sell until 2013. In two years they'll make millions.
It’s a bit like those hedge fund and private equity dealings where people pool money. As the Wall Street Journal points out the reason the SEC is looking in to it is that these “Special purpose vehicles” we would call them shams, are “usually formed to move assets off a company's balance sheet to help avoid some regulatory scrutiny and capital requirements.” (WSJ 1-5-10)
So Facebook can keep its financial secrets and Goldman’s clients can reap a nice harvest.
I can’t wait for the Wikileaks releases on BofA
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