We’re told that a Facebook (FB) Director described as a “venture capitalist and hedge fund manager” sold 20.1 million FB shares on Aug 16 and 17, adding $395.8 million to the $640.1 million he received for selling 16.8 million shares in the recent initial public offering (IPO), a $1.04 billion take. The guy still holds, we’re forced to guess, 7.8 million shares, and doing the math from numbers included in a story that took some wading through, he apparently bought something like 44.7 million FB shares for $500 thousand in 2004, meaning the position is 83% liquidated now.
FB, offered at 38 in the IPO, fell to a low of 18.75 last week, then rebounded to close at 21.01 on Friday, up 5.04% from the previous day. Subscribers, lets just pause here for a moment … if you’re wondering who’s crazy enough to step in front of this train wreck at 19 and bid the quote up 5.04% in one trading session, the answer is, nobody. In one of the more insidious twists to Wall Street racketeering, investment bankers are allowed to short-sell stock in an IPO they've screwed up, in fact during the offering they can short up to 15% of the total real shares offered and just stick their phony-baloney shares in with the authentic ones on Crime Family books so the public can’t tell the difference. Mob trading capos are then granted free reign to cover these shorts by closing out half-bogus sell transactions with upside-down half-bogus buy transactions at their criminal leisure. Like Friday.
Short-selling is the principal mechanism used by financial racketeers to inflict maximum damage on the victimized public, perpetuating the original crime for as long as that takes. (Short-covering accompanied by media pundit “is it time to get in?” coverage is probably the leading cause of death in the United States, striking Seniors as hard as it does, shortening lives by hours, days, weeks, and even years that would otherwise succumb to all the causes actually - and erroneously – cited.)
Now $500 thousand divided by 44.7 million shares comes out to a little more than a penny a share. That's what you-know-who paid for his FB stock. Public investors buying into the IPO, who could have included you and us … well okay, you anyway ... invested $38 a share. Suckers have lost over $17 of that “investment” so far, including pro forma fees and commissions. The “venture capitalist and hedge fund manager” guy got his stock for a penny and pulled down a tad over $1 billion in profit, the tad being $39.5 million for those of you familiar with colloquial English and rounding.
It's curiously difficult to identify the exact number of shares offered in the FB IPO, but if you put it at 484 million, one guess we ran across, then the investing public's loss in the drop from 38 per share to 21 has totaled $8.2 billion. And our WTF guy made $1 billion. Himself.
And there’s no chance anybody but us will even think about sending this whatever-he-really-is-guy to jail.
Insiders are subject to selling restrictions in and after an IPO. For FB, 5 releases are scheduled during its first year as a public company. The first came last week, freeing up 271.1 million shares.
Another, possibly overwhelming, 1.44 billion shares will be unlocked in the weeks ahead - from now through November.
