NEWS ADVISORY: SEC scrutiny of Goldman Sachs’ Facebook deal

“When faced with issues such as those raised in the current Facebook financing strategies and methods, investors find themselves in very murky waters,” says Professor John Alan James.

January 4, 2011

Contact: Bill Caldwell, Office of Public Information, Pace University, 212-346-1597, wcaldwell@pace.edu

 NEWS SOURCE

 Topic: SEC scrutiny of Goldman Sachs’ Facebook deal

 “When faced with issues such as those raised in the current Facebook financing strategies, investors find themselves in very murky waters.”

 John Alan James, the expert on corporate governance and regulatory issues who created the first texts in English on laws governing companies in key European countries, is an adjunct management professor at Pace University’s Lubin School of Business in New York City. At the Lubin School five years ago he was the first to introduce into an MBA curriculum anywhere in the world a course covering corporate governance systems in the leading world economies.

James is available to comment on Goldman Sachs’ investment in Facebook and possible SEC scrutiny on disclosure. He has appeared on Bloomberg Radio and Television to discuss the Madoff scandal and among other media appearances was quoted in the Financial Times about the Goldman Sachs scandal and on CFO.com about the Satyam scandal.

 “When faced with issues such as those raised in the current Facebook financing strategies and methods, investors find themselves in very murky waters.

 “The creation of the Special Purpose Vehicle provisions enables Facebook to raise huge sums of investor capital with ill-defined liquidity provisions, little to no transparency for very wealthy investors, vague definitions of ‘shareholder’ within the SEC recommended 500 investor limit, and a lack of clarity on whether and how smaller ownership units might be grouped into smaller number of ‘shareholders’ to remain within SEC limits.

 “It appears that the creativity within Goldman Sachs is to become expert on the existing letter of the law, find the vague areas and develop new instruments to take advantage of the lack of clarity. This could end with Goldman Sachs back in front of a House Committee (now Republican) to testify again on the firm’s definition of the ‘spirit of the law’.”

 Phone: 203-588-1668 (home), 203-979-3611 (cell); email: jjames@pace.edu

 BACKGROUND: As a professional management consultant, James and his Brussels-based staff created, edited and published the first texts in English on company law, corporate governance and industrial relations law in the 12 key countries of Western Europe. He has served as an advisor to the top managements of multinational companies with headquarters in the US, Europe, Japan, Asia and Latin America.

 He was an early contributor to the multinational business and economic seminars at the World Economic Forum in Davos, Switzerland. He co-chaired the first global conference on Multinational Companies and Multinational Unions at the U.N. International Labour Organization center in Geneva, Switzerland.

 James received his bachelor’s in political science from Northwestern University and graduate degrees in business economics at the Booth Graduate School of Business of the University of Chicago. He has lectured at the World Economic Forum in Davos; INSEAD at Fontainbleau, France; CEI/IMEDE in Switzerland, the Northwestern and Harvard European Executive Programs; the IBM Management Development Centre in Brussels; the United Nations Management Training Centre in Torino, Italy; the Wharton School at the University of Pennsylvania; the Kellogg School of Management at Northwestern University; and the Cornell University School of Industrial Relations.

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