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Facebook Gets SEC Stock Exemption

November 21, 2008

Fenwick & West was recently highlighted in the Business Week article, "Facebook Gets SEC Stock Exemption."

Facebook recently received a waiver from the Securities & Exchange Commission so it can continue distributing equity to new employees. This comes after concern that the Securities & Exchange Act of 1934 might force the privately held company to start disclosing financial results publicly once it has more than 500 stockholders and $10 million in assets.

In a letter to the SEC, Facebook counsel Fenwick & West wrote that the company "anticipates that it could in the future have more than 500 holders" of restricted stock. They also argued that there's no need to meet the SEC disclosure requirements, since only insiders are getting the equity and not paying for it.

Facebook was granted the exemption on October 14.