Was the Facebook IPO a fraud?

Interesting piece by Mike Elgan.

My take:

1. Everyone knew that the reason for the IPO was to make a select group of people rich. The initial impetus may have been compliance with SEC rules about when a company must go public but once the lawyers and the bankers get involved it's all about how much money they can skim. If that's the basis of the fraud claim it's weak sauce. You have to work to be defrauded by ignoring common knowledge. What it was was a pig wearing not only a lot of lipstick but eye shadow, rouge and a negligee too.

2, 3, 4 - Again common knowledge but they feed into #5

5. This is where I think the fraud occurs. As Elgan says "So far, the company has not actually demonstrated anything that could justify a $100 billion valuation or anything near it." Facebook itself knows this that is why they lowered their earnings expectations. The fact that they present themselves as worth $100,000,000,000 is in itself fraudulent.

I don't think the way the company is structured is fraudulent. Again that was public knowledge. I do think it is rather stupid. The rationale is that this will allow Zuckerburg to make the decisions he needs to and that what we are really investing in is his vision. Fine except I haven't seen any real vision demonstrated.