The very public announcement of the private offering of shares in Facebook by Goldman Sachs has recently drawn attention to the hazy line between public and private offerings. The financial press have questioned: (1) the continued validity of the public/non-public offering distinction in the federal securities laws, noting the very active and well-known secondary trading market for shares of private companies, and (2) the SEC’s loose application of the 499-shareholder limit for private companies. The SEC is reportedly conducting a review of the private equity markets

The Legal Issues in the Goldman-Facebook Deal

Update: The SEC review seems to have yielded results. Goldman Sachs has decided to exclude U.S. investors – some of its best clients – from the Facebook offering.Goldman Limits Facebook Investment to Foreign Clients 1/17/11

Facebook Fiasco Reveals Flaws in Private Offerings 2/10/11