It has only been a couple of days since Facebook became richer by half a billion dollars. Money does buy happiness, and a way out of the IPO (reporting its financials doth not a public listing make). However, only the rich can get richer. Unless your net worth is calculated in millions, you are not invited to the party.

First, lets take a look at what the SEC has to say. According to the Securities and Exchange Act of 1934, a publicly traded company has to file periodic reports, and report its financials and business operations. These reporting obligations are inescapable and mandatory by law. If a private company exceeds 500 investors, these obligations become enforceable as well, irrespective of whether the company is listed or not.

By getting its fundings from Goldman and DST, Facebook increases the number of investors by just two entities. Goldman however, is offering its clients access to about $1.5 billion worth of equity in Facebook; and the number of people availing the offer is likely to be well over 499. Which means Facebook gets it fundings from more than 500 investors; but not really, as far as the SEC is concerned.

Right now, everybody is keeping a stiff upper lip; but if Facebook gets away with this, surely others will follow suit, and the SEC does not want that. Infact the SEC has had its eyes on Facebook shares trading in the secondary market even before the Goldman investment.

Who sells these shares? The ones who have them, of course. The company used to give its employees stock options (now it reportedly gives them RSUs or Restricted Stock Options), and some of them sometimes sell.

So can you start buying Facebook stocks? Yes. The stocks are auctioned in the secondary market. Check out SharesPost. Or Secondmarket, for example. Just to give you an idea,

SharesPost boasts $125 billion in capital, 450,000 members, and $1bn in posts to buy or sell. Its a rich man’s world. Incidentally, Facebook is not the only company that SharesPost keeps. Zynga, Twitter, LinkedIn, and Linded Labs are some other names you will come across here.

The stocks are sold at an auction (which means there is no fixed price), where both buyers and sellers can stay anonymous. What SharesPost and secondmarket have done in essence is create a platform with a standard set of contracts; where neither the buyer nor the seller have to meet in order to trade, and both of them are spared the hassle of drawing up terms of sale.

These brokerages can also connect potential investors to managers in late-stage venture-backed companies for a more personal persuasion. All this exclusivity comes at a price. Trading is restricted to accredited investors (typically, someone whose individual net worth at the time of purchase exceeds $1 million), qualified purchasers (typically, someone who has more than $5 million in investments) and qualified institutional buyers (typically investment or insurance companies, and employee plans maintained by the government, among others).

But don’t tell your wife!

According to a WSJ report, Goldman insists on clients'spouses signing confidentiality agreements as well. Incidentally, the same report also adds that in the first nine months of 2010, Facebook had net income of $355 million on revenue of about $1.2 billion, quoting a person who had seen  the document, and decided to confide to the Journal.

So why doesn’t Facebook want a IPO?

The company might feel it will fare better in a boom economy, and wants to ride out the Great Recession and its aftermath. Much more likely is it is because Facebook does not really need the kind of capital a public offering can yield, at the cost of the associated obligations and even increased public scrutiny.  It is doing well enough by doing good enough. Whatever be its reasons, what it wants, it has got. At least for now.

The company has appreciated by an estimated $40 billion since its $10 billion price tag in 2009. Its current fiscal year ends on Dec. 31 (see the impeccable timing of the investment?), making its disclosure deadline the end of April 2012, or 120 days as stipulated by SEC regulations. However, the SEC cannot demand that Facebook list itself, merely insist that it reveal its financials.

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