Goldman ending Facebook offer

SAN FRANCISCO (MarketWatch) — Goldman Sachs Group Inc. plans to stop soliciting potential investors in shares of closely-held Facebook Inc. due to overwhelming demand, according to a report published Wednesday.

The Wall Street Journal, citing unnamed sources, reported that Goldman /quotes/comstock/13*!gs/quotes/nls/gs (GS 170.69, -1.52, -0.88%) has already received orders “of several billion dollars” for an interest in the social-networking service.

Potential investors have been asked to invest a minimum of $2 million. Goldman’s limited offering of up to $1.5 billion for Facebook shares is reportedly being coupled with a $500 million Facebook investment made directly by Goldman and Russian firm Digital Sky Technologies.

A Goldman spokesman declined to comment.

Reports of Goldman’s investment in Facebook and related special investment vehicle designed to enable a select group of investors to buy into the Palo Alto, Calif.-based company surfaced earlier this week.

The vehicle appears to be designed to enable Facebook to sell equity to a larger number of backers, without triggering a Securities and Exchange Commission regulation that requires significant public financial disclosures from firms with 500 or more investors. That’s because the vehicle could be counted as a single investor.

By remaining private, Facebook could avoid the additional pressure and scrutiny that would come with having to divulge internal financial information.

However, due in part to developments such as Goldman’s vehicle for investing in Facebook, the SEC is reportedly investigating whether disclosure rules for private firms need to be revised.

According to the Journal report, wealthy Goldman clients, hedge funds and private-equity firms who do business with the investment bank have been invited to participate in the Facebook vehicle.

Investors would be banned from selling their Facebook shares until 2013, including sales on the so-called secondary markets which have become increasingly popular of late, according to the report.