You got that??? (Photo: flickr.com/jamiesrabbits)

Oh the times, oh the customs! These days, with every Tom Dick and Harry CEO maintaining a Twitter account and public Facebook page, it's easier than ever to violate the S.E.C.'s rules about where you can disclose key information so all your shareholders see it. That's already gotten Netflix CEO Reed Hastings into a little trouble (not that his example stopped rogue Tesla CEO and would-be Martian Elon Musk).

Well today the S.E.C. announced that it's a-okay to announce "key information" (like sales figures) via social media, "so long as investors have been alerted about which social media will be used to disseminate such information."

So, to clarify:

“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” said George Canellos, Acting Director of the SEC’s Division of Enforcement. “Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don’t know that’s where they need to turn to get the latest news.”

In other words, an announcement from the company's designated Twitter feed is fine, but no random personal Facebook updates, even if you have a quarter of a million subscribers. Okay, Reed? Think you can handle that?

(h/t Anthony De Rosa)

(Photo: James Cridland via Flickr)

As soon as the JOBS Act passed back in April, would-be equity-based crowdfunding platforms were crawling out of the woodwork, ready to be open for business as soon as the S.E.C. handed down the rules governing this wild financial frontier.

But it seems they might be all dressed up with nowhere to go, for now at least. The New York Times reports that the S.E.C. is most likely going to blow its end-of-year deadline. In fact, it might be 2014 before equity-based crowdfunding is a reality. Hope your startup wasn’t depending on selling shares to average Internet joes!

Now, before you start grousing about government inefficiencies, there's some question about whether the deadline was ever really doable in the first place:

“It’s actually a significant job to do the regulations in this area, so it was an unrealistic expectation that the S.E.C. would have it completed by now,” said Barbara Roper, director of investor protection for the Consumer Federation of America, which is lobbying the agency on other aspects of the JOBS Act.

The trick is balancing investor protection with the reality that a crowdfunding platform might collapse under the weight of the traditional regulatory burden. For example, the S.E.C. wants a requirement that anyone raising more than half a million dollars must pony up audited financials. Just imagine how Kickstarter projects would fare under that kind of burden.

On top of everything else, the S.E.C. is in the midst of a leadership shuffle, with chairwoman Mary Shapiro taking her leave--along with the underlings who ran the regulation-writing office.

Welcome to the swamp that is Washington, D.C., citizens of Startupland.

Because you're dying to make "eggnog cinnamon chip scones," just like Randi Zuckerberg's family. [NYT]

Amid news that Apple plans to invest $100 million in U.S. manufacturing plants, here's a video of the assembly line at NeXT Computer, the company Steve Jobs founded in 1985 after being exiled from Apple. [Qz]

John McAfee is back in a Guatemalan jail, after being hospitalized for an apparent heart attack. [ABC]

Online school Thinkful says "finance sucks" and that the 11,000 Citigroup workers about to be axed should seek work at a New York City startup. [TechCrunch]

Driftwood chic.

When news broke this morning that Airbnb had supposedly raised a $117 million Series C, the only possible response was: Damn, that's a nice chunk of change, and one in line with expectations. However, it appears that, in all the anticipation over another major round, the gun has been jumped.

When we reached out for comment, Airbnb gave us the following statement of denial:

Airbnb filed a Form D today with the Securities and Exchange Commission covering the company’s issuance of shares of its preferred stock as a part of its Series B financing, which initially closed over a year ago, on July 22, 2011. Today's filing was a customary notification related to the company’s prior Series B financing, and is unrelated to any other financing that the company may choose to undertake in the future.

Chalk it up to the trickiness of reporting on SEC filings, which are written for lawyers rather than us mere mortals: Companies have a whole year to file after raising a round, and sometimes convertible notes have been confused for raises.

There's also the fact that everyone in the tech press is eagerly anticipating news from Airbnb. TechCrunch reported back in September that the company was in the process of raising a major round, and the Wall Street Journal reported last week that Peter Thiel is in talks to invest as much as $150 million at a $2.5 billion valuation, with participation from existing investors Andreessen Horowitz and Sequoia Capital. But so far, none of the names being tossed around seem willing to talk.

And so, we wait.

(Photo: Harvard.edu)

Zappos' Tony Hsieh is using his empire to help revitalize downtown Las Vegas. "I first thought I would buy a piece of land and build our own Disneyland." [New York Times]

Sources say the SEC's probe into Facebook's IPO has found no evidence that the company withheld information from investors. Good news for those seeking relief for the stock dive in civil court: Whether retail investors were led astray by misleading info from brokers still remains to be seen. [Bloomberg]

BuzzFeed is opening a Los Angeles bureau; prepare for a lot more celebrity photo lists. [BuzzFeed]

Internet service providers like Verizon and Time Warner have launched the Copyright Alert System, a new warning feature that will send notes to customers they've found are pirating content. Users who ignore these messages could even have their connections throttled, because ISPs will pretend to care about piracy if it gives them an excuse not to pay for bandwidth. [CNN]

Shopping for glitzy gowns just got a lot easier. On Friday, Rent the Runway introduced a new feature that replaces models with everyday women, "allowing visitors to search for women of a certain age, height, weight and even bust size, to see how that dress looks on someone similar."  [New York Times]

Yeah, you should be sweating (Photo: scrapetv.com)

Yesterday over drinks, we asked an angel investor if he thought Gilt Groupe would actually go public this quarter or next year, as planned. Fat chance given the post-Facebook IPO market, he replied. (Stronger language was used.)

Today, Bloomberg offers a must-read, in-depth investigation into just how cynical Facebook was in the lead-up to the IPO, including obscuring material information on risks demanded by the Securities and Exchange Commission. Those vulnerabilities, such as difficulties in monetizing mobile, decelerating revenue and dependence on Zynga, became painfully evident to shareholders who have watched what was supposed to be "the IPO of the Century," drop in share price from $38 down to $19.69 as of this afternoon. 

Lest you think it's merely the vagaries of the public markets, Bloomberg outlines how Facebook's pricing structure played into that (emphasis ours):

Despite the cautionary signs, on May 15 Facebook and Morgan Stanley executives raised the asking price to a range of $34 to $38 from $28 to $35. A day later they also increased the number of shares being sold by 25 percent to 421.2 million. That was an effort to create a stronger buffer against a price decline in August when insiders and early investors were allowed to sell their stock, said one person familiar with the matter. The lock-up period was for only three months, unusually short compared to the average six months.

Some of the culpability lies with the SEC--specifically, the agency's policy that that makes a company "responsible for its own disclosures," which allowed correspondence from the SEC demanding answers about risks to go unpublished until a month after the IPO.

A dozen letters, published a month after the May 17 IPO on the SEC’s website, depict a management team hesitant to disclose information and still guessing at even rudimentary aspects of its business just weeks before the company held the largest-ever technology initial public offering.

Of course Facebook's decision not to delay the IPO after significant, last-minute changes in forecast was "almost unprecedented," analysts told Bloomberg.

There was also the hysteria leading up to the IPO. In July 2011, trading on SecondMarket suggested that Facebook had a market cap of $85 billion. Its current market cap is $42.2 billion.

While the SEC continues to conduct an “in-depth review of all the participants” in the IPO to determine if anyone left out or lied about material information, Bloomberg has outlined some of its known sins against shareholders.

In one instance, Facebook cited Nielsen as a source for statistics about social ads that actually came from Facebook's marketing materials. And it wasn't until an ultimatum from the SEC that the reference was removed. Then, in addition to Facebook's troubling uncertainty over the number of mobile users (the SEC noted that they were counting some users twice, putting total user count into question), Facebook also seemed clueless as to where in the world their users were coming from:

"The company counted as Canadian many BlackBerry users around the world because the servers are based in Canada."

But the most egregious manipulation--as Bloomberg covers in great detail--involved who was told what and when, bringing us back to the impact of Facebook's IPO on the overall market. On May 9th, the same day Facebook released a "pivotal" disclosure "to investors cautioning about the growth in mobile users exceeding growth of ads," Zuck, CFO David Ebersman, and COO Sheryl Sandberg were on the road show hyping the stock. Meanwhile:

Investor relations staff at Facebook began placing a battery of calls to equity analysts with a dour warning: sales for the second quarter and full year wouldn’t likely match its earlier guidance, according to people familiar with the situation.

Analysts adjusted their forecasts down and shared them verbally with their firms’ institutional clients, whose demand for the stock sagged as a result, people with knowledge of the matter said on May 10. Sharing that information only with institutions isn’t unusual, and it’s legal as long as they don’t do it in writing.

But it wasn't just institutions who were investing.

Yet Facebook wanted the larger retail allocation to let its users take part in the IPO, the person said. In the end, 25 percent of the shares sold at the IPO were allocated to retail investors, other people have said. That exceeds the average amount of 15 percent.

It should have been enough to delay the IPO, Luigi Zingales, a finance professor at the University of Chicago’s B-school, told Bloomberg.

Still, said finance professor Zingales, “The fact that some institutional investors got access to a company’s information that was not available to ordinary investors creates the perception that there are two sets of rules and increases the mistrust in the market.”

So who emerged unscathed from this mess? Take a guess.

There were no headaches for investors who bought equity while Facebook was still private and were able to sell at the $38 IPO price. Goldman Sachs sold 24.3 million shares, which raised $924 million at the IPO price, doubling its original investment. Greylock Partners made 18 times its initial investment, selling 7.6 million shares for $289 million. Microsoft sold 6.6 million shares, which raised $249 million, more than quintupling its initial stake.

Stay tuned for more fallout later this month "when holders of more than a billion shares, many of them employees, will be permitted to sell."

Financial planning with the ease of the Google doc.

Alexa von Tobel is fond of analogies. Blame her time at Harvard, as both an undergrad and in the university's MBA program--before she won a business plan competition and took a leave of absence to launch LearnVest, a personalized financial tool for those who can't spare the $2,000 to $3,000 to sit down with a financial planner. ("61 percent of Americans are living paycheck-to-paycheck," she noted from the company's sunny new Soho office. For the former Morgan Stanley trader--and head of biz dev for Drop.io--statistics tend to roll off the tongue.)

In the past, Ms. von Tobel--the first in a growing line of local HBS female founders--has called LearnVest, "Weight Watchers meets personal finance." In a recent TEDxTalk, she longs for a "Biggest Loser" for household budgets. But in demoing LearnVest's revamped new platform and iPhone app last week--financed by a $19 million Series B led by Accel Partners last July--she opted for something more ambitious, describing it as "LegalZoom meets personal finance," for its ability to take hard-to-parse documents and make them accessible to the masses.

All that relational thinking paid off when Ms. von Tobel showed us LearnVest's souped-up new "Money Center," a free personal financial tool that lets you synch up credit cards, savings accounts, 401ks, etc. Borrowing elements familiar to any Google user, the center uses its own internal categorization system to shuffle purchases into folders like food or utilities (à la Gmail) and, most importantly, lets you co-view your finances online while on the phone with a certified financial planner (like you're sharing a Google Doc.)

As part of its new-and-greatly-improved service, the company also announced that has an official Registered Investment Advisor (RIA) status with the SEC, which means those CFPs can now offer investment advice. Ms. von Tobel mentioned that one recent LearnVest customer signed up with $12 million in assets, although some clients also come to the site hundreds of thousands of dollars in debt.

With the possibility of a expert lifeline, our heart palpitations over failing to meet LearnVest's 50:20:30 ratio (to allocate towards essentials:savings: fun) abided. Momentarily.

LearnVest started offering phone and email consultation with human CFPs (heavily-vetted for their financial--and empathetic--prowess) earlier this year and is now up to a staff of 50, available around the clock. If you sign up for a premium plan, you'll be assigned the same CFP so the expert is familiar with your finances. Users can choose from three plan options, ranging from a one-time $89 fee for one phone consultation and unlimited email support for three months, up to a $599 package for them to construct a five-year plan including investment advice, quarterly phone calls, and unlimited email with your CFP for a year.

"I wouldn't even call Mint a true competitor," she told Betabeat, after taking us through the revamped service and impending iPhone app. That's not exactly true. A recent visit to Mint.com, which was acquired by Intuit in 2009 for $170 million, shows the company also offers an iPhone app, (less colorful) budgets, goal-setting graphs, and even email and SMS alerts about fees. But it also revealed that the last time Betabeat perused our Mint.com account was more than two years ago. It's a good argument for the accountability of a human advisor.

(Photo: James Cridland via Flickr)

It was glaringly sunny in Washington, D.C., on April 5, the day President Barack Obama signed the JOBS Act, and there was some confusion as to the location of the afterparty. One faction of Rose Garden attendees gathered on the roof of the W Hotel and wondered where everyone was. The rest assembled at Off The Record, a dimly lit bar in the basement of the Hay-Adams Hotel, and kicked things off with an icebreaker.

About 30 smartly dressed men and women, still sweating out the adrenaline of being three rows away from the president, stood in a circle. Many had worked with each other but never met. Each stated their names, the role they played in the bill, and perhaps a few words about the brave new world of so-called equity-based crowdfunding, which had just been legalized by one of the six constituent laws that make up the JOBS Act. The new rule will allow “ordinary Americans,” in the president’s words, to invest in a nonpublic company in exchange for shares for the first time since the enactment of the securities regulation that followed the 1929 stock market crash.

The mood was triumphant and boozy. Tim Rowe, a Cambridge-based venture capitalist, raised a glass and offered a toast to working together in the future. “The Marine Corps was founded in a bar in Philadelphia,” he said. “Big things can happen starting in a bar.” Attendees signed up to join a trade organization for the newly minted market. “There was the sense of elation that we had cracked the monopoly of Wall Street,” one attendee recalled.

Right now, new businesses have limited ways to raise capital. They can petition venture capitalists to invest, or beg family and friends for cash. Recently, entrepreneurs have also started appealing to the crowd through sites like Kickstarter. After being rejected by venture capitalists, one Palo Alto company called Pebble raised more than $10 million on Kickstarter to build a touch-screen “smartwatch” that can be programmed by an iPhone.

Equity-based crowdfunding, also called crowdfund investing or crowdinvesting (the practice is so new that we’ve yet to settle on a vernacular) is the new IPO. Or rather, it will be in about six months, once the Securities and Exchange Commission hammers out the nuances of the law. Under the new rules, entrepreneurs can solicit up to $1 million from the public in exchange for a slice of future profits. Pebble promised to ship watches in 2013 to everyone who donated. If equity-based crowdfunding had been legal, Pebble could have sent its backers a stock certificate in addition to a gizmo.

Advocates of equity-based crowdfunding believe the change is long overdue. Among those clinking pints at Off The Record were Woodie Neiss, a motivational speaker and former consultant who helped spearhead the 460-day lobbying effort; Amy Cortese, the journalist and author of Locavesting; Jenny Kassan, who three years ago petitioned the SEC to let people invest up to $100 in a business without having to file; and Michael Shuman of Cutting Edge Capital, who argued three years ago that $100 of risk was “no more dangerous to an investor than a dinner for two at a Chinese restaurant.”

Of the equity-based crowdfunding enthusiasts, perhaps the most ebullient are the entrepreneurs who plan to launch websites where unaccredited investors can commit $2,000 to $100,000 in a year, depending on their income and net worth. In exchange, they’ll own a slice of the next Facebook, the next Shake Shack or the next Enron, at the early stage normally reserved for venture capital firms and millionaires.

New York, according to recent Wharton grad Ryan Feit, is the epicenter of crowdfunding—and likely will be the same for equity-based crowdfunding. Mr. Feit’s yet-to-launch site, SeedInvest, works out of the same Soho loft as Kickstarter competitor Indiegogo, and both were supporters of the new law. On a recent Thursday morning, Mr. Feit and three other neatly dressed Wharton grads were stationed at their Macbooks, as they have been for the month since they graduated and moved to New York.

Only one, James Han, is actually building the site. The other three are working on “education,” “setting up partnerships,” talking to the SEC and giving media interviews, Mr. Feit said, when asked what there is to work on given that the first crowdfunded investment is still at least six months away. “A lot of the fun is figuring out what it’s going to look like,” he said. “It’s way more complicated than just setting up a page that looks like Kickstarter. We have to be very nimble to adapt.”

According to JOBS, the new widows-and-orphans investor class must go through so-called “portals,” Kickstarter-esque intermediaries that can ensure a minimum level of diligence so people who are already underwater on their mortgages don’t withdraw their last $3,000 hoping to score big enough to take care of their grandchildren.

Regulatory agencies have until January to write the rules for the portals, and the deadline will likely be extended. Still, portals are already popping up. Crowdfunder, EarlyShares, FundRazr and PleaseFund.us have all already been certified under the nascent Crowdfunding Accreditation for Platform Standards, or CAPS, a program developed by the independent website Crowdsourcing.org. WeFunder, a Boston-based portal, launched two months before the law was passed, with nothing more than a homepage and an online petition addressed to Congress. The site has remained essentially frozen since then. “Soon, you’ll be able to invest as little as $100 in your favorite startups,” it says.

Mike Norman, one of WeFunder’s four founders, acknowledged that he already has competitors in a market that does not yet exist. “You need to get it right,” he said. “There are a lot of folks who are going to try to get into this and it’s not going to go well. A small subset will really rise to the top.”

There are now more than 450 sites offering donation-based crowdfunding or perks-based crowdfunding à la Kickstarter, where the writer Bret Easton Ellis just financed his new film, The Canyons. (Backers who pledged $1 got a digital poster; those who pledged $3,000 or more get to work out with Mr. Ellis and his personal trainer for a week.) This type of crowdfunding has been around for more than a decade but has rapidly accelerated in the last three years, financing multiple multimillion-dollar projects.

But the hype around perks-based crowdfunding is nothing compared to the hype around equity-based crowdfunding. There are at least 100 portals in various stages of development, estimated Vince Molinari, founder of New York-based Gate Technologies, a broker-dealer that plans to provide services to the new portals. “I heard as high as 200,” he said, although “there will be some attrition because of the timeline.”

Maybe it’s the yearning for hope in a desperate economy, or maybe it’s some vestige of post-Occupy Wall Street popular empowerment. Maybe it’s just the glitz of The Social Network and the fact that half the hipsters in Dumbo have quit their bands to do a startup. Fred Wilson of Union Square Ventures, perhaps the best-known early-stage venture capital firm in New York, imagines the market for equity-based crowdfunding could come in around $300 billion. The category has the potential to put some traditional venture capitalists out to pasture—or worse, he joked, drive them into blogging.

“Philosophically, I think it’s wonderful,” said Slava Rubin, the founder of Indiegogo, a crowdfunding platform that, like Kickstarter, rewards backers with perks, not equity. Mr. Rubin, who splits his time between New York, San Francisco and conference keynotes, was also invited to the White House for the signing, although Indiegogo is still evaluating whether to get into the equity-based crowdfunding businesses.

Indiegogo just raised $15 million from venture capitalists for the old kind of crowdfunding, so Mr. Rubin feels no pressure to jump into the new kind. “It’s hard to decide anything when you don’t have the facts yet,” he said. “I think it’s really interesting that so many people are trying to figure out exactly what’s going to happen.”

(Kickstarter cofounder Perry Chen has said Kickstarter will stick to rewards-based funding. "We’re not gearing up for the equity wave if it comes. The real disruption is doing it without equity," he said recently in an interview with GigaOM.)

First, the SEC must finalize the rules for disclosure and advertising, and untangle what accredited and unaccredited investors will be allowed to do on the new portals. (The first thing the agency did was ask for public comment on the proposed rules.) Then the Financial Industry Regulatory Authority must write its own rules for portals. Until that happens, equity-based crowdfunding is illegal, the SEC has said.

There is some concern that the commission will suffocate the new industry. “The SEC is a regulatory body, so they get paid to regulate. They don’t really get paid extra money for not regulating,” Mr. Rubin said. “I’m actually quite surprised this is happening.”

Still, most equity crowdfunding proponents are careful to pay homage to the SEC, wary of accusations that equity-based crowdfunding will open the door for widespread ripoffs. As an investment, few things are riskier than a startup. The Washington State Department of Financial Institutions is already worried, issuing a press release after the JOBS Act passed: “When you see an offering on the Internet—whether it is on a crowdfunding portal, in an online newsletter, on a message board or in a chat room—you should assume it is a scam until you have done your homework and proven otherwise.”

Equity-based crowdfunding is already legal in the U.K., where the rules amount to basically “buyer beware.” Kickstarter, Indiegogo and other perks-based crowdfunding platforms have had low levels of fraud despite a firm “caveat backer” approach, and scams that do slip through are often detected right away.

Internet sleuths discovered at the end of April that a video game project raising $80,000 on Kickstarter was ripping off other artists’ work (and was likely manned not by a team of 12 industry veterans, as it claimed, by just one young man with no experience building video games). Although the project’s creator initially protested that the game was “well in progress and is NOT a scam of any kind,” the story spread from forum to forum and eventually reached his former employer, who started emailing journalists. Within 24 hours, the would-be entrepreneur canceled the campaign and disappeared.

Last year, venture capital firms invested $41 million in a social network called Color that was declared an immediate failure after botching its highly-publicized launch. Color went into hiding, reemerged about eight months later as a video app for Facebook and is unlikely to ever make money. Scores of startups that went through the elite accelerators at Y Combinator and TechStars, which accept between one and three percent of applicants, fail every year. Even Mark Cuban lost money on Facebook.

It's true that crowdfunding can test whether there is a market for an idea and provide an evangelical base of early users. But given the dubiousness of companies that are already being professionally funded, we’re in for a spate of boneheaded startups now that Joe Blow, MBA, can blast an email out to his frat brothers and hustle up $500,000 for the world’s first unmanned fast-food delivery drone.

As it turns out, overambitious projects are more common than outright scams on Kickstarter. Eco-friendly sandals, artsy-looking jellyfish tanks and a $100 pen made by a Brooklyn design studio all disappointed backers by failing to meet expectations, or simply never delivering a finished product at all. The equity crowdfunding provision passed in part on hopes that it would create jobs. It’s worth remembering that when the economy is bad, fraud tends to spike—and so do sales of lottery tickets.

Mr. Taylor (Photo: Google+)

Looks like we're gonna have to add another name to our Facebook Mafia list. Chief technology officer Bret Taylor told Kara Swisher at AllThingsD that he will be leaving the company for an "undetermined startup." Shortly after, he acknowledged his departure on his Facebook page. (A parting traffic gift, perhaps?) 

"I'm excited to be starting a company with my friend Kevin Gibbs," Mr. Taylor wrote, thanking Mark Zuckerberg as a mentor and friend.

Considering that Mr. Taylor has been in charge of Facebook's mobile and platform initiatives, this doesn't look good for the social network, which is currently embroiled in an SEC investigation and facing fresh scrutiny today about how a shift to mobile could affect revenue.

Get in line, SEC! That's the $100 billion question.

Cause you're growns-up and you're growns-up and you're growns-up!

It's been less than a week since Facebook debuted on the public markets. But each day, it seems, unearths new contenders for another round of the Facebook IPO Blame Game. (Play along at home!)

While Congress plans its investigation into underwriters like Morgan Stanley, Dan Primack dropped an interesting perspective in his Term Sheet newsletter: Blame the "adults."

Institutional investors also didn't want Zuckerberg to take Facebook public unless he added some big-name "adult" supervision. After all, what does a 20-something know about running a multi-billion dollar public corporation? Just imagine the costly mistakes he would make.

Hence hiring seasoned executives like Sheryl Sandberg as COO and David Ebersman as CFO. But the hires meant to boost Facebook's maturity level with the public markets may have backfired.

Mr. Primack, for example, has some choice words regarding Ms. Sandberg's decision to recuse herself from the underwriter selection process based on her previous relationships at Google.

Pardon me, but wouldn't such relationships actually have been important? Not to get bankers to take on Facebook as a client -- everyone wanted them -- but because she might have a better sense of who would, and wouldn't, be the best fit? And, once Facebook did pick her pal Michael Grimes over at Morgan Stanley, wouldn't it have been good to have a third opinion in the room -- particularly one so close to both key players?

Mr. Grimes, if you'll recall, helped Morgan Stanley lock down deals for the LinkedIn, Pandora, Zynga, and Groupon IPOs, which Henry Blodget credits to his "dork" cred and love of video games.

As the Wall Street Journal reports, Mr. Grimes was the Facebook CFO's "main confidant."

"This IPO was an Ebersman and Grimes show," said one of the people familiar with the matter. "They were joined at the hip."

It seems they both saw eye-to-eye on decisions that may have sealed Mr. Ebsersman's fate as "Facebook fall guy."

The Journal's sources say it was Mr. Ebersman, backed by Morgan Stanley, who decided--less than three days before the IPO--to boost the number of shares Facebook would offer by 25 percent.

His main adviser at lead underwriter Morgan Stanley assured him there was plenty of demand, they said.

That decision by the 41-year-old Facebook executive may have doomed any real chance the social-networking company had that its stock would jump on its first day of trading—a hallmark of successful IPOs.

Now, just because an IPO pop makes a big noise doesn't necessarily mean its a hallmark of success. But Mr. Primack notes, Mr. Ebsersman may also have been guilty of selective disclosure:

Then there is Ebersman, who oversees a financial operation that allegedly warned underwriter analysts -- but not others -- to cut Q2 guidance estimates (even if all it really said was "please start paying attention to what we said about mobile"). If true, what he (and MS) did may actually have violated securities regulations -- and also means he shouldn't be too quick to count his unvested shares.

While potential shareholders were fretting about Mark Zuckerberg's controlling share of Facebook, who was watching the grown-ups table?