Facebook: Government regulation is ‘costly’
Buried in Facebook papers for its initial public offering this week are concerns about the burden of government regulation. In the S-1 form submitted to the Securities and Exchange Commission, Facebook described how the rules and regulations governing public companies could affect the company:
(SOURCE: AP )
As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (Exchange Act), the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the [sic?], and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming, or costly, and increase demand on our systems and resources.
The company also warns that the greater disclosure required under federal law will leave it more vulnerable to lawsuits:
As a result of disclosure of information in this prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results.
That said, the financial advantages of being an IPO--at least for the company’s shareholders and owners, whose worth multiplied in no short order this week--seems to dwarf this added burden, at least for the moment.
(h/t ABA Dodd-Frank Tracker)
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