The new policy of the social networking company was aimed at preventing legal
messes that might ensue if a private deal went awry, according to a person
close to the matter.
The US Securities and Exchange Commission mandates that buyers and sellers of
private company shares have equal information about the company’s financial
perfor-mance.
But this leaves employees with two unsavoury options – either disclose
non-public material information about their employer and violate
confidentiality agreements or risk falling foul of SEC regulations.
"Facebook has implemented an insider trading policy to better comply with
insider trading laws and to protect the interests of the company and its
employees and shareholders," a Facebook representative said.
As a private company, Facebook must also limit its shareholders to no more
than 500. Should it exceed that number, SEC rules mandate that it report its
financial data as if it were a public company.
Facebook, however, has far fewer than 500 shareholders, according to a person
close to the matter.
The company stopped issuing equity to new employees at the end of 2007 and
since then it has given new hires restricted stock units, which can be
redeemed in the event of an initial public offering or acquisition.
Hot commodity
The shares have become a hot commodity, selling for $20 (€15) each on sites
such as SharesPost and SecondMarket, which facilitate the sale of common
stock to private buyers.
Such trades have valued Facebook at $17bn, nearly triple the $6.5bn at which
it valued itself when Digital Sky Technologies, the Russian investment
company, bought a block of shares last July.
Greg Brogger, SharesPost's chief executive, said based on an average of share
price trades and funding-round valuations, the company was valued at $11bn.
Zuckerberg
Mark Zuckerberg, Facebook's chief executive, has made clear that he is in no
rush to take his company public. But some senior Facebook employees are
becoming eager to sell stock.
At the same time, investors are keen to secure whatever bit of the company
they can. With more than 400m users, the social network is expected to be
one of the most high-profile IPOs since Google when it does go public.
Elevation Partners is reported to have bought $90m worth of Facebook shares
on the secondary market in recent months.
The company does not release statements on its financial performance. However
it said that it was cash-flow positive last year, and outside estimates put
2010 revenues at $1bn to $1.5bn.
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