Trade Goldman Sachs' Facebook Flop (GS, LOCM, STVI, SPMD)

Goldman Sachs GS discarded its plans to offer U.S. investors private stock shares of Facebook, as reported this morning by Bloomberg. Goldman Sach's abandonment of this sale is a heavy blow for U.S. investors in the increasingly hot market of privately-owned social media engines. The decision to drop the Facebook sale was triggered by scrutinizing U.S. media coverage, according to a statement by Goldman Sachs. "Goldman Sachs concluded the level of media attention might not be consistent with the proper completion of a U.S. private placement under U.S. law," the company stated. "The decision not to proceed was based on the sole judgement of Goldman Sachs and was not required or requested by any other party." Why is Goldman Sachs so concerned? U.S. securities laws do not allow private placement stock sales to advertise or solicit to its consumers, as the sales are not available to the general public. The failure of a company to keep its private stock sales private can draw SEC investigation, and some analysts believe the SEC had a hand in Goldman Sach's announcement to pull out of the U.S. investor sale. Purchasing stock in a private offering is an opportunity for investors to have access to a company prior to its public listings and can be a very lucrative way to play the market. If one has the opportunity to participate in private sales of popular sites and the means to do so, this investment looks like it will pay off. Ironically, keeping social media sales unsocial will be the key factor in a successful trade. The SEC has also been rumored to be investigating activity in Groupon, LinkedIn, and Zynga. For more information about social media trading, see a previous Benzinga article about this topic. Publicly-traded social media companies include Local.com LOCM, Snap Interactive STVI, and Super Media SPMD. Read more about these companies here. Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.