Facebook halts trading in secondary markets, IPO to follow?

Facebook has reportedly halted trading in secondary markets, possibly indicating that the world’s largest social network may finally be ready for its long-awaited IPO.

According to Bloomberg, representatives from Facebook’s law firm, Fenwick & West, sent a letter to one of the markets explaining the decision.

The decision to halt trading on secondary markets is not necessarily an indication that Facebook is on the verge of going public. An analyst speaking to Bloomberg, feels that this may, however, be the case.

“Facebook and companies who do this don’t want to expose themselves to lawsuits related to the fact that some people had it before others and were able to trade on it,” Sam Hamadeh, CEO of PrivCo. told Bloomberg. “The best way to protect yourself is to have no one able to trade.”

Speculation has been rife around Facebook’s IPO for some time now. They picked up steam again in late November, when the Wall Street Journal reported that the social networking giant could go public in the first half of this year.

Facebook’s decision to go public — when it comes — may be based as much on pragmatism as opportunity.

Come April 2012, the company will be forced to make its shareholder information public as it will likely cross the 500 shareholder limit by the end of this year.

Facebook could publish this information without going public. According to the Journal, however, this comes with some disadvantages. “Board members and top executives have privately acknowledged that it would leave the company at a severe disadvantage, since they would have most of the liability that comes with being a public company, but lose out on the fundraising benefits of a public offering,” it says.

Facebook’s fellow player in the social space, Twitter, has at times sought to buy out shareholders in order to avoid such a scenario.

Facebook representatives have refused to comment on any speculation surrounding an IPO



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