Facebook faces an SEC inquiry focused on private investments, according to news reports.
Facebook has raised US$500 million from Goldman Sachs and a Russian investor, even as the U.S. Securities and Exchange Commission has reportedly opened an inquiry into private trading at the social-networking giant and other tech companies, according to news reports.
Goldman Sachs has invested $450 million in Facebook, and Digital Sky Technologies, a Russian investment group, has invested $50 million, in addition to earlier investments in Facebook, the New York Times DealBook reported. Meanwhile, the SEC has opened an inquiry into private shares trading at Facebook, Twitter, LinkedIn and Zynga Game Network, DealBook reported.
A Facebook representative declined to comment on either the reported investments or the SEC inquiry. An SEC spokesman wasn't immediately available for comment.
It's not clear what the SEC inquiry is focused on, but DealBook and other publications have suggested that the agency may be interested in a rule that limits private companies to fewer than 500 shareholders. After a company passes 500 shareholders, it must register its shares with the SEC and publicly disclose its financial results, according to SEC rules.
It's possible that the 500-shareholder rule could push Facebook into an initial public offering, or reign in shareholder investment, according to DealBook and other media outlets.
In 2010, Facebook took steps to limit its employees from selling shares, including charging large fees for doing so.
Goldman Sachs plans to allow its clients to invest in Facebook through its investment, DealBook reported.