Facebook Inc (NASDAQ:FB) Went Against SEC To Keep Mobile Perils Concealed Before IPO Crash
When Facebook Inc(NASDAQ:FB) had filed its offer on 1st February of going public, it had touted the effectiveness of adverts associated with customers’ friends, quoting research from the audience-counting firm, Nielsen.
An assistant director for corporation finance at the US Securities and Exchange Commission, Barbara Jacobs seemed skeptical as she and her team vetted the filing to make sure Facebook had disclosed all information to its investors. The claim seemed to be drawn from marketing materials, as she wrote to Chief Financial Officer, David Ebersman.
She had given him an ultimatum to produce the study and provide Nielson’s consent for the use of the information, or not using it, as per her letter to Ebersman on 28th February. Facebook had dropped the reference after an initial confrontation.
The event was part of a two and half month exchange of messages among SEC officials. A dozen of letter were published a month after the IPO on 17th May on the website of SEC. they depicted a management team that seemed cautious to reveal data and guessing at even elementary aspects of its business just weeks before the firm held the largest-ever technology first public offering. A number of problems raised by the SEC and now intimidating investors were prefigured in the then-private communication between Facebook and the SEC.
A managing director at Wedbush Securities Inc., Michael Pachter said that both SEC and Facebook were given the benefit of doubt when they had gone public. However, they still have not proved themselves.
It is a big question whether Facebook will be able to make money from the soaring number of mobile users, who see lesser ads than other users. The letters reveal executives holding important details until SEC pushed for further revelation.
Jacobs had raised questions on how Facebook claims its metric to be accurate on 22nd March after noting that the social networking site was counting some mobile users twice.