Dec29Written by:SuperUser Account
12/29/2010 10:19 AM 
29 Dec 2010 08:54 AM
- by Janice Vanos, Contributing Writer; Image: Facebook and Twitter, along with other social networking sites, are facing an SEC investigation that may require them to go public
Social networking giant, Facebook, is facing an Securities and Exchange Commission (SEC) investigation that end with the company having to go public. Twitter, Zynga, and LinkedIn are also facing a similar investigation.
The investigation is centering on the private stock holdings of the companies in question. By law, no privately-held company can have 500 or more stock options available.
Recent websites, such as SharePost and SecondMarket, facilitate the share trading of privately held companies, such as Facebook.
Many executives and company officers who have been with Facebook, and the other social networking companies, for several years have begun selling their private shares of the company through these sites and through other methods. According to sources close to the investigation, reported by the New York Times, this sharing is likely to have pushed some of these companies over the 499 shares threshold, meaning that they must make a public offering and disclose financial information publicly.
The same happened to Google in 2003 and to Microsoft in 1986. Bill Gates, CEO and founder of Microsoft, originally opposed the move for the public offering but was forced into it and wound up becoming one of the richest men in the world.
Facebook executives insist that they are opposed to a public offering of a company that, with 500 million users, might prove to be highly lucrative.
Paul Allen Lawsuit
Paul Allen, co-founder of Microsoft, has added to Facebook's woes by filing an amended lawsuit on December 28. Allen, whose original lawsuit was rejected for being too vague, is suing Facebook, and Apple, AOL, eBay, Google, and others for patent infringements.
The lawsuit is primarily targets Google's Android platform and the apps related to it. Furthermore, the suit targets Facebook for its "related photos" feature, along with AOL for its own "related news" feature. Apple (through iTunes) is also being sued for its own "related albums" feature. The other companies have similar features, for which they are being sued.
Google's Gmail and AOL are also being sued for their spam filters which, according to Allen, infringe on Microsoft's email patents.
Most importantly, if the lawsuit is successful, Android users will lose a lot of the apps that they currently use and the Android system may be heavily damaged.
For now, however, Facebook is entering the new year following a dramatic ending to 2010.
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