The social-networking giant’s law firm has instituted a three-day suspension of trading in secondary markets, Bloomberg reported. Although Facebook is still a private company, employees and early stakeholders have been able to sell shares privately using exchanges such as SharesPost and SecondMarket.
Under the suspension, buy and sell orders for shares can be placed, but the law firm will not process them until Jan. 27. Companies will suspend trading prior to an IPO filing to protect themselves from lawsuits—making sure investors can’t buy or sell until all the company’s information is public—Sam Hamadeh, chief executive officer of New York-based PrivCo, told Bloomberg.
Although this is not the first time the law firm has suspended Facebook trading, it is seen as indicative of an imminent IPO filing.“I don’t think it could mean anything else than an IPO being imminent. It is very unlikely that it would have anything to do with operational issues,” says Doreen Bloch, a former analyst at SecondMarket who traded Facebook shares at weekly auctions.
Because Facebook recently passed the 500-shareholder limit at which the SEC forces companies to go public, the social networking site must launch its IPO by April 2012, Bloch says. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
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