Goldman to offer Facebook shares only to non-U.S. clients

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Goldman Sachs Group Inc. slammed the door on U.S. clients hoping to invest in a private offering of shares in Facebook Inc., because it said the intense media spotlight left the deal in danger of violating U.S. securities laws.

Goldman’s decision to allow only non-U.S. investors to buy shares in the social-networking site is a black eye for the Wall Street firm, which sent jealous rivals scurrying for look-alike deals when the Facebook agreement surfaced two weeks ago.

The change could damage Goldman’s ties to some of its most lucrative clients, left empty-handed just as they were deciding whether to invest in Facebook, clients say.

Facebook executives were frustrated by the headache of restructuring the deal at the last minute, according to people familiar with the situation. But the private offering of as much as $1.5 billion in Facebook shares remains on track.

About $7 billion in orders have poured in from foreign investors, or more than $4 for every $1 in shares being sold, according to people familiar with the situation. While high-profile U.S. investors would have been another seal of approval for Facebook, a person close to the company said it is comfortable with a heavier-than-expected concentration of non-U.S. investors. About 70% of the site’s users live outside the U.S.