Did the chief operating officer of Facebook just put the kibosh on an IPO for the social network?
A recent post on the website AllFacebook.com argued that it was possible recent remarks by Facebook chief operating officer Sheryl Sandberg at a CNBC moderated debate in Davos might have violated SEC rules requiring a “quiet period” around an initial public offering.
So let’s say this right upfront: it’s total nonsense.
People are newly sensitive about this issue because of the issues that arose when Groupon’s CEO sent an email to thousands of employees in September. Groupon postponed meetings with potential investors while it worked out a resolution with the SEC. It’s still in dispute whether the email or market turmoil caused a delay in the IPO. In any case, the company went public in November.
So why isn’t Sandberg in danger of facing the same kind of scrutiny from the SEC?
Because under the relevant securities rules, the prohibition on “conditioning the market” does not apply until after it files its registration statement with the SEC. Facebook has not filed—so it Sandberg isn’t barred from talking about the IPO.
The rules regarding post-filing communication are extremely complex and convoluted. But pre-filing it’s clear as day.
Pretty simple stuff.
Mark Zuckerberg: Inside Facebook
In seven years, Mark Zuckerberg has gone from Harvard dorm to running a business with a possible value of $100 billion. On CNBC, an interview with the Facebook CEO tonight at 10p ET/PT and Wednesday at 8p ET.
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