I have posted several times regarding my negative views of the financial value of Facebook. As you may know, Goldman Sachs put together a “fund” to invest $500 in Facebook at a valuation of 50 billion. This structure lets Facebook get around the requirements of going public by having more than 500 investors. Goldman is well know for having creative ways to get around regulations. Just look at how they helped Greece hide much of their debt. But the deal also lets Goldman get even more money then they would get if they just sold stock. They are getting a 4.5% placement payment, a 4% carried interest (they get 4% of any gain in Facebook stock over the 50 billion dollars) and they get a 1.5% a year management fee. Now who did they sell the stock to? To a bunch of greedy people who do not really care what Facebook is worth but think that there are greedy and stupid people that will buy Facebook at the IPO for 100 billion dollars. There are probably terms that will allow the Goldman investors to sell into the IPO or soon after or Goldman will find away to lock in their gains (and Goldman 4% carry interest). Then all the people that have Facebook at low valuations will start dumping their stock. That will not hurt Goldman who will have probably sold Facebook short. I have seen this movie before. It will be ugly.