Goldman Restricts Client Investment In Facebook The investment firm Goldman Sachs has told its wealthiest U.S. clients they can not invest in Facebook. The offer will be limited to clients outside the U.S. Goldman's decision to shut U.S. investors out comes after concern that the deal was drawing scrutiny from the Securities and Exchange Commission. For more, host Melissa Block speaks to Andrew Ross Sorkin, a reporter and columnist with the New York Times.
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Goldman Restricts Client Investment In Facebook

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Goldman Restricts Client Investment In Facebook

Goldman Restricts Client Investment In Facebook

Goldman Restricts Client Investment In Facebook

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The investment firm Goldman Sachs has told its wealthiest U.S. clients they can not invest in Facebook. The offer will be limited to clients outside the U.S. Goldman's decision to shut U.S. investors out comes after concern that the deal was drawing scrutiny from the Securities and Exchange Commission. For more, host Melissa Block speaks to Andrew Ross Sorkin, a reporter and columnist with the New York Times.

MELISSA BLOCK, Host:

Andrew Ross Sorkin, of The New York Times, first broke the story of the deal. And he says this is a damaging setback for Goldman Sachs.

ANDREW ROSS SORKIN: And because of, frankly, our news article breaking the news and all of the media attention that happened thereafter, there became a concern that this private offering had turned quite public. And because of that, there was a concern at Goldman Sachs that eventually, after this SEC inquiry that's ongoing now ends, that potentially they could come back to Facebook and Goldman Sachs and say uh-uh, you can't have done this, even though you did do this, and you're now going to have to go buy back the shares from the people you sold them to.

BLOCK: It is interesting, Andrew, this notion of soliciting clients because Goldman wasn't advertising the shares. I mean, this was public knowledge through media reports, including your own. Goldman's spokesman told the Wall Street Journal, the extent of the media feeding frenzy was a surprise. How problematic was it, and how rare is it for the SEC to step in, or potentially step in, on a deal like this?

ROSS SORKIN: So they actually started sending out email solicitations to their clients before the article actually came out, knowing that it was coming out that evening. And it is, in fact, that particular sequence of events that is one of the things the SEC is looking at.

BLOCK: Yeah, I'm not clear, Andrew, what Goldman would've had to have done differently to avoid the SEC scrutiny that we're talking about.

ROSS SORKIN: They had planned to do this on a very short leash, a very tight timeline. They had really hoped to go out to investors and, within three to four days, raise the money. So I think there was a hope that somehow they'd be able to do this and keep it in private until the deal closed, in which case, once it became public, it wouldn't be a problem.

BLOCK: Andrew, do you basically have a lot of very wealthy, U.S. Goldman clients right now shaking their fists at you and saying, Andrew Ross Sorkin, you just blew a really big deal for me?

ROSS SORKIN: I don't know if anybody thinks it's my fault in particular. You take the words Facebook and Goldman Sachs and put them in the same sentence, it becomes a media sensation unto itself. So I think this was bound to happen one way or the other.

BLOCK: I've been talking with Andrew Ross Sorkin, a reporter and columnist with The New York Times. Andrew, thanks.

ROSS SORKIN: Thanks so much.

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