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SEC could force Facebook to float

Wednesday 5 January 2011 - by Nicola York

Facebook could be forced into a float after it was revealed that the US Securities and Exchange Commission was investigating share trading in internet companies.

Yesterday, Goldman Sachs announced it has pumped $500m of investment (€377m) into the social networking site, valuing it at $50bn (€37.7bn) which has led to renewed rumours that Facebook may be forced to go public.

Last week, GFS reported that the SEC had sent letters to investors trading in the stock of privately-held internet firms - believed to include Twitter and Facebook - to request further information on how they are valuing the shares of such firms.

Firms with more than 499 shareholders must float according to an SEC rule and the watchdog is looking into whether Facebook falls under this rule.

In 2008, Facebook managed to gain an exemption from this rule because it said that most of its shares are held by staff.

The SEC has still not commented publicly on the matter.

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