Right - the difference, of course, is that in those funds aren't usually designed to hold shares in a single company to avoid public disclosure regulation. The closest thing that comes to my mind is the funds that arose to allow for ownership in BRK, once it got too expensive for shareholder to own even a single share (BRK is over 100K) - so these funds developed to allow people to track BRK. Of course, the company running those funds got the voting rights. For numerous reasons, this was problematic to Warren Buffet, so he created a tracking stock, BRK-B, that allowed individuals to have the ability to track/exchange for shares of BRK-A (the primary stock)
If the SEC allows Goldman to get away with this - I guarantee you that we'll see the same thing popping up for numerous other startups that don't want to engage in public disclosure, but would like a taste of that public money.
And you just know what investment bank will be servicing those companies. :-)
Start your timers - by June 5th, the SEC will be issuing some kind of ruling on this, and by Sept 5th, I wager Facebook will be requested to make a public disclosure of their finances.
I don't know of many grandma's with savings accounts that are going to be able to put down the $2 mil for the GS FB Investment Vehicle. With a $2 million buy-in, it's hardly 'public' money, these guys are going to be solidly in the accredited investor space. Public disclosure laws are designed to protect unaccredited investors being fleeced by guys like GS.
Accredited investors are what GS is going after with this vehicle, not your grandma's savings account. (GS got that when they convinced the Fed to print money like it was going out of style)
Personally I find the current state of regulations for public companies to be overly onerous, and I think that the whole unaccredited investor 'protection' is a bit of a sham considering what the SEC allows to pass for a 'public' market where winners and losers are chosen by gov't officials with the interests of investment banks and campaign contributors at heart. (The unions made out pretty good when they convinced gov't of a bailout of GM & Chrysler)
You can say what you want about GS but seriously, the Fed did bail GS out with the whole AIG fiasco.
If you knew that the Fed would bail you out every time you made a bad investment why wouldn't you act like GS does?
If you were regulated by a gov't agency, wouldn't you want to put your guys in those board seats?
GS is not evil, they're just highly adapted to the current regulatory environment. What GS does is what any rational economic agent would do in the current regulatory environment. It's the politicians and voters who need to be called out for setting up such an easily gamed system.
Comments
Right - the difference, of course, is that in those funds aren't usually designed to hold shares in a single company to avoid public disclosure regulation. The closest thing that comes to my mind is the funds that arose to allow for ownership in BRK, once it got too expensive for shareholder to own even a single share (BRK is over 100K) - so these funds developed to allow people to track BRK. Of course, the company running those funds got the voting rights. For numerous reasons, this was problematic to Warren Buffet, so he created a tracking stock, BRK-B, that allowed individuals to have the ability to track/exchange for shares of BRK-A (the primary stock)
If the SEC allows Goldman to get away with this - I guarantee you that we'll see the same thing popping up for numerous other startups that don't want to engage in public disclosure, but would like a taste of that public money.
And you just know what investment bank will be servicing those companies. :-)
Start your timers - by June 5th, the SEC will be issuing some kind of ruling on this, and by Sept 5th, I wager Facebook will be requested to make a public disclosure of their finances.
I don't know of many grandma's with savings accounts that are going to be able to put down the $2 mil for the GS FB Investment Vehicle. With a $2 million buy-in, it's hardly 'public' money, these guys are going to be solidly in the accredited investor space. Public disclosure laws are designed to protect unaccredited investors being fleeced by guys like GS.
Accredited investors are what GS is going after with this vehicle, not your grandma's savings account. (GS got that when they convinced the Fed to print money like it was going out of style)
Personally I find the current state of regulations for public companies to be overly onerous, and I think that the whole unaccredited investor 'protection' is a bit of a sham considering what the SEC allows to pass for a 'public' market where winners and losers are chosen by gov't officials with the interests of investment banks and campaign contributors at heart. (The unions made out pretty good when they convinced gov't of a bailout of GM & Chrysler)
You can say what you want about GS but seriously, the Fed did bail GS out with the whole AIG fiasco.
If you knew that the Fed would bail you out every time you made a bad investment why wouldn't you act like GS does?
If you were regulated by a gov't agency, wouldn't you want to put your guys in those board seats?
GS is not evil, they're just highly adapted to the current regulatory environment. What GS does is what any rational economic agent would do in the current regulatory environment. It's the politicians and voters who need to be called out for setting up such an easily gamed system.