FACEBOOK IPO A GREAT BUY, BUT NOT WITH LONG LOCKUPS AND FAT FEES

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I have been advocating backing up the truck and buying all the Facebook (FB) shares an investor can get in the IPO.  (For background please see:Facebook IPO Is Nigh, Should You Buy?)

When an IPO is as white hot as Facebook, plenty of scams are bound to raise their ugly heads.  The Financial Industry Regulatory Authority (FINRA) has done a good job of warning investors about scams. I encourage investors to read the write up by FINRA before considering pre-IPO Facebook shares.

In the United States, securities offerings such as shares of Facebook must be registered with the U.S. Securities and Exchange Commission (SEC) or meet an exemption.

I think most Forbes readers are capable of knowing a scam when they see it therefore I am not writing about scams.  My focus in this piece is about another practice that may be legitimate but still should be approached with caution by investors.

I receive a large volume of emails.  Here is an excerpt from an email by an investor who was offered an opportunity to buy Facebook shares pre-IPO:

“It will be 20,000 dollars between me and my dad.  There is a 10% fee off the top for banking fees, commissions, etc and we have to hold our stock for six months after the stock goes public. Is this a good investment? The brokerage company is on Wall St and I am familiar with my broker (meaning I trust them).”

I question such offerings to investors who may not be accredited investors…Read more at Forbes

 

 

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