Academic

You've probably heard by now that Goldman will only be offering shares in the Facebook SPV to non-U.S. clients.  Deal Prof Steve Davidoff opines that Goldman misunderestimated the level of interest, and blinked because of the potential reputational hit.  This even though its exposure for under the securities law--rescission of shares that would likely go up in value anyway--wasn't high.  Certainly Goldman wound up with egg on its face.  The WSJ: "Facebook executives were frustrated by the headache of restructuring the deal at the last minute."  I should say so.

More from Davidoff:

Finally, Goldman?s decision is likely to step up the scrutiny of nonpublic markets for common stock. The fact that Goldman was unwilling to sell these shares to domestic investors but give the opportunity to foreign ones will raise some outcry to liberalize the rules for offering stock on these markets. This outcry will be countered by claims that the Facebook media fury is unique. [ed. note: here's an outcry, or at least, an outgrumble, from Friend-of-Glom Larry Ribstein]

These markets should not exist unless the kind of information made available for a public company is made available for private companies or only investors who can truly assess the risks should be allowed to participate. This is a real debate and should spur a rethinking of how we want these markets to be regulated.