| invest in new shares of Facebook. Instead it will sell the shares exclusively to foreign investors. This has been portrayed as a victory for the Securities and Exchange Commission. And as Andrew Sorkin wrote in the New York Times, it is "considered a serious embarrassment for Goldman." It is the SEC that should be embarrassed. Goldman's move shows how banking has become so international that companies can sidestep the SEC's rules with ease. It also shows that the commission's rules regarding stock sales are crippling for U.S. investors. Facebook will raise just as much capital, $1.5 billion, as was planned originally. The terms of the deal are also the same: Investors will still put up a minimum of $2 million and commit to hold the shares until 2013. The deal won't hurt Goldman either—it will earn at least as much in fees and commissions as before. The reality is that investment banks like Goldman have been moving brokerage and banking business offshore for decades. They are well positioned in Asian and European capitals to continue to do so. |
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