Chronology of SEC – Facebook correspondence leading up to IPO
This is a complete chronology of the communications between the Securities Exchange Commission (SEC) and Facebook in the months leading up to their IPO.
The incident was part of a two-and-a-half-month volley of messages among SEC officials, Ebersman and Facebook’s law firm Fenwick & West LLP. A dozen letters, published a month after the May 17 IPO on the SEC’s website, depict a management team hesitant to disclose information and still guessing at even rudimentary aspects of its business just weeks before the company held the largest-ever technology initial public offering. Many of the issues raised by the SEC and now unnerving investors were foreshadowed in the then-private correspondence between the SEC and Facebook.
The letters and phone calls paint a much uglier picture than we believed at the time. We knew there were deep rooted doubts about:
- ability to lever mobile advertising
- risk of loss of revenue from Zynga
- accuracy of user count
However the correspondence here suggests was living in the dream of having 3/4 billion users and will make money somehow, as opposed to the required diligence involving a public offerring. There is a real desire to ignore risks, rather than accept them and provide mitigation rationale.
There are some amusing things in here too. Because all blackberry traffic gets routed through Canadian servers in Waterloo, the count of Canadian users is completely inaccurate.