Feds Investigate Facebook's Money

The Securities and Exchange Commission is reportedly reviewing whether a private Facebook investment vehicle runs afoul of financial disclosure laws. Which, given that the vehicle was designed by the infamous economic pillagers at Goldman Sachs, borders on a self-answering question.

The SEC is looking into whether it needs to rewrite disclosure rules for privately held firms like Facebook and Twitter, says the Wall Street Journal (subscribers), after seeing a fishy $500 million deal between Facebook, Goldman and a Russian investment firm. New Yorker investment writer John Cassidy immediately called for SEC action when the deal went public Monday, calling the transaction an obvious ploy to get around rules that companies with more than 500 investors must publicly report their financials. Goldman would evade those rules by pooling up to $1.5 billion from investors who would collectively count as a single entity.

This scheme, in short, would let Facebook raise money like public company but keep secrets like a private one. Apparently when Zuckerberg said that the new "social norm" was people "sharing more information... more openly and with more people" he was talking about Facebook's users and not its proprietors.