A Facebook Private Market Freeze?
While the clearing of all Facebook private market trades has been halted for three days, the market continues to operate on an as-normal basis and has not seized up as earlier reports indicated, according to people familiar with the matter.
Facebook’s legal team at Fenwick & West informed private market participants that they were temporarily placing a hold on private market trades waiting to be approved, according to these people.
Facebook is allowed a 30-day window in which it can approve a sale of its private shares, meaning the trades currently waiting to be cleared have already matched buyers with sellers.
Fenwick told these market participants that the cause for the delay was due to an internal audit of Facebook’s shareholder count. Such an audit would need to be completed prior to filing for its initial public offering, but it remains unclear if that means a filing will happen within that 3-day window.
This is not the first time Facebook has halted private market clearing, according to these same people.
The company’s COO Sheryl Sandberg is scheduled to speak in Davos on Sunday, which makes it highly unlikely that Facebook will file before then. Once firms file registration paperwork with the Securities and Exchange Commission, they are subject to strict quiet period rules. A person familiar with Sandberg’s schedule said she remained committed to the speaking appearance.
Auctions on the private marketplace are continuing without disruption, according to market participants, and volumes are not expected to take a significant hit because of the clearing delays.
A spokesperson at Facebook declined to comment.
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