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Facebook to stop secondary-market trading this week

The biggest tech IPO in history could be ready to debut in May

Financial trends and news by Steven Loeb
March 28, 2012 | Comments
Short URL: http://vator.tv/n/2588

People have been waiting months for Facebook shares to finally go public, while others are trying to get a few shares in the secondary markets in anticipation of a big pop out of the gate.

Now Facebook has asked firms that trade its stock on secondary markets, like SharesPost, to stop at the beginning of April. 

SharesPost sent out an e-mail today to its clients saying in part, “At Facebook’s request, SharesPost will cease facilitating transactions in Facebook stock as of Friday end of day to help ensure the company’s orderly transition into the public markets.”

The auction end date was then moved up from April 2 to this Friday, March 30.

It's unclear whether Facebook's halting of shares would indicate an imminent IPO. In January, the company halted shares, raising speculation that the IPO would be right around the corner. Now, it's being speculated that the debut day will come some time in May, according to Bloomberg. 

By halting the trading of shares, however, Facebook would certainly be letting the market settle down before it goes public. It would end price fluctuations and allow investors to determine its valuation, which is expected to be around $100 billion.

Facebook filed to raise a $5 billion IPO with the SEC in February.

Earlier this month, Facebook took out a $5 billion line of credit and $3 billion 364-day bridge loan.

It was also announced last week that Facebook would only be paying its 31 underwriters, which include Morgan Stanley, J.P. Morgan, Goldman Sachs, Bank of America, Barclays, Citigroup, Wells Fargo, Goldman Sachs, and Allen & Co., a 1.1% fee.

Facebook stock is so sought after that DST, one of the company's biggest investors, recently put some of its own shares up as an incentive in return for a $25 million investment in a new fund.

The SEC  has even begun cracking down on trading companies who they say were misleading investors looking to buy Facebook stock.

SharesPost, and its CEO Greg Brogger, were accused of not registering as a broker-dealer but still engaging in securities transactions. SharesPost and Brogger agreed to settle and pay penalties, without denying or admitting to guilty to the charges. SharesPost will pay $80,000 and Brogger will pay $20,000.

Now that the stock is most likely going public in only month or two, we will find out if all that frenzy was worth it. 

Facebook would not comment on the story.

(Image source: scrapetv.com)

 


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