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Dual share classes have existed for a long time. If people dont like the share structure they can not invest.

by wbl 7y ago

toomuchtodo 7y ago
Or compel the SEC to require a deprecation of dual class structure as part of a settlement agreement. All Facebook crimes are securities crime when you’re public (apologies to Matt Levine). This administration seems to want to go after tech. If you’re a large Facebook investor, encourage them. You’re going to lose some value, but less than if you leave Mark in charge.
- bilbo0s 7y ago
  But there won't be any settlement agreement. That's the problem. Assuming there will is akin to just saying, "Well, someone will fix it" while executing the Jedi Hand Wave gesture. We're not Jedi. If we want things to change, we have to change the actual laws. Expecting lawyers to find some violation under current law is fanciful in the extreme.
eeeeeeeeeeeee 7y ago
It’s really not that simple when FB is in so many funds / indexes. It has market effects even if you don’t invest in it.
- wbl 7y ago
  That was a choice with passive investment. If you want active you can do it and see if dual structure is harmful.
  - bilbo0s 7y ago
    True. There's always the option of putting your money where your mouth is. If you're saying a dual class structure is bad, and not in the interest of shareholders or companies? I mean, well, you should be willing to put your money behind that assertion. It should be to your benefit because the implication is that not investing in companies with dual class structures should be more profitable over time.
- deleted 7y ago
  [deleted]
ineedasername 7y ago
Yes, they can decide not to invest, but that doesn't preclude pushing for a change, and saying they don't think the current structure is in the best interest of the company or shareholders. (I'm not sure they're right though. Zuck's track record isn't stellar, but I shutter to think what a completely mercenary company chasing every last cent might do. Much bad as we've seen, I don't think we've seen things as bad as they could be)
- TuringNYC 7y ago
  I’m a willing investor in FB, but not everyone is. If you are a pensioner, quite likely your money is invested in index funds containing FB....so it isn’t that easy. That said, these voters should try to change the SEC guidelines, no use hating the player, change the game.
  - ineedasername 7y ago
    I figure there's no need to choose. They can try to change from within the company and also push the SEC for reform. Personally I don't like the idea of a Zuck autocracy, but I'm also not convinced that anythinng else would better. I know, hardly a decisive opinion, but I don't think we've yet seen a FAANG level company go completely balls to the wall monetizing ever last bit of personal data, so it's a tenuous balance.
  - AstralStorm 7y ago
    Why should SEC limit or ban dual share stock? You know exactly what you're getting, a semi-public company.
bilbo0s 7y ago
This is what I don't understand? I mean, did people not read the prospectus? What, exactly, did they think "dual class" meant? These people should consider divesting, because I'm not certain that they studied their investment target closely enough to wargame out different possible outcomes prior to throwing money at FB.
- Bartweiss 7y ago
  You're right that this was obvious, but I think the people actually guiding this vote did read the prospectus. It's just random armchair commentators who are outraged that this outcome is unfair. This vote was proposed by Trillium Asset Management, an activist investment group. They hold $7M of Facebook stock, and the group they lead to bring the ouster vote appear to control around $3B. These are people who knew what they were investing in, and decided to bring this vote to put pressure on Facebook, not in a deluded hope that it would pass. What's more, a bunch of the outside investors seem to want more leverage without wanting Zuckerberg out - there's a 15-point gap between "voted for a new chair" and "voted to end dual class stock". More broadly, this is just a round of the kind of corporate advertising via news that PG called the 'submarine' (http://www.paulgraham.com/submarine.html http://www.paulgraham.com/submarine.html). Trillium called a vote that couldn't pass, and was on hand to provide a pithy closing quote to Business Insider's reporter. BoingBoing is running the story with a narrative of fighting the evil tech billionaires, never mind that Doctorow normally hates the idea of companies "disciplined by shareholder choices". Meanwhile, Trillium's website posted the story "Trillium's Ongoing Pressure on Facebook Governance in the News" - this is a conscious and apparently quite effective effort to create a "Zuckerberg ignores his shareholders" narrative.
  - bilbo0s 7y ago
    >this is a conscious and apparently quite effective effort to create a "Zuckerberg ignores his shareholders" narrative... My point is that the prospectus "...is a conscious and apparently quite effective effort to create a 'Zuckerberg ignores his shareholders' narrative..." It's quite literally, publicly stated company policy in this regard.
wnevets 7y ago
Yeah I have very little sympathy for "powerless" shareholders of a multi-billion dollar company. How could they not know what they were getting into before investing?

Dual share classes have existed for a long time. If people dont like the share structure they can not invest.

by wbl 7y ago

Dual share classes have existed for a long time. If people dont like the share structure they can not invest.

Or compel the SEC to require a deprecation of dual class structure as part of a settlement agreement. All Facebook crimes are securities crime when you’re public (apologies to Matt Levine). This administration seems to want to go after tech. If you’re a large Facebook investor, encourage them. You’re going to lose some value, but less than if you leave Mark in charge.

bilbo0s 7y ago
But there won't be any settlement agreement. That's the problem. Assuming there will is akin to just saying, "Well, someone will fix it" while executing the Jedi Hand Wave gesture. We're not Jedi. If we want things to change, we have to change the actual laws. Expecting lawyers to find some violation under current law is fanciful in the extreme.

eeeeeeeeeeeee 7y ago

It’s really not that simple when FB is in so many funds / indexes. It has market effects even if you don’t invest in it.

wbl 7y ago
That was a choice with passive investment. If you want active you can do it and see if dual structure is harmful.
- bilbo0s 7y ago
  True. There's always the option of putting your money where your mouth is. If you're saying a dual class structure is bad, and not in the interest of shareholders or companies? I mean, well, you should be willing to put your money behind that assertion. It should be to your benefit because the implication is that not investing in companies with dual class structures should be more profitable over time.
deleted 7y ago
[deleted]

ineedasername 7y ago

Yes, they can decide not to invest, but that doesn't preclude pushing for a change, and saying they don't think the current structure is in the best interest of the company or shareholders. (I'm not sure they're right though. Zuck's track record isn't stellar, but I shutter to think what a completely mercenary company chasing every last cent might do. Much bad as we've seen, I don't think we've seen things as bad as they could be)

TuringNYC 7y ago
I’m a willing investor in FB, but not everyone is. If you are a pensioner, quite likely your money is invested in index funds containing FB....so it isn’t that easy. That said, these voters should try to change the SEC guidelines, no use hating the player, change the game.
- ineedasername 7y ago
  I figure there's no need to choose. They can try to change from within the company and also push the SEC for reform. Personally I don't like the idea of a Zuck autocracy, but I'm also not convinced that anythinng else would better. I know, hardly a decisive opinion, but I don't think we've yet seen a FAANG level company go completely balls to the wall monetizing ever last bit of personal data, so it's a tenuous balance.
- AstralStorm 7y ago
  Why should SEC limit or ban dual share stock? You know exactly what you're getting, a semi-public company.

bilbo0s 7y ago

This is what I don't understand? I mean, did people not read the prospectus? What, exactly, did they think "dual class" meant? These people should consider divesting, because I'm not certain that they studied their investment target closely enough to wargame out different possible outcomes prior to throwing money at FB.

Bartweiss 7y ago
You're right that this was obvious, but I think the people actually guiding this vote did read the prospectus. It's just random armchair commentators who are outraged that this outcome is unfair. This vote was proposed by Trillium Asset Management, an activist investment group. They hold $7M of Facebook stock, and the group they lead to bring the ouster vote appear to control around $3B. These are people who knew what they were investing in, and decided to bring this vote to put pressure on Facebook, not in a deluded hope that it would pass. What's more, a bunch of the outside investors seem to want more leverage without wanting Zuckerberg out - there's a 15-point gap between "voted for a new chair" and "voted to end dual class stock". More broadly, this is just a round of the kind of corporate advertising via news that PG called the 'submarine' (http://www.paulgraham.com/submarine.html http://www.paulgraham.com/submarine.html). Trillium called a vote that couldn't pass, and was on hand to provide a pithy closing quote to Business Insider's reporter. BoingBoing is running the story with a narrative of fighting the evil tech billionaires, never mind that Doctorow normally hates the idea of companies "disciplined by shareholder choices". Meanwhile, Trillium's website posted the story "Trillium's Ongoing Pressure on Facebook Governance in the News" - this is a conscious and apparently quite effective effort to create a "Zuckerberg ignores his shareholders" narrative.
- bilbo0s 7y ago
  >this is a conscious and apparently quite effective effort to create a "Zuckerberg ignores his shareholders" narrative... My point is that the prospectus "...is a conscious and apparently quite effective effort to create a 'Zuckerberg ignores his shareholders' narrative..." It's quite literally, publicly stated company policy in this regard.

wnevets 7y ago

Yeah I have very little sympathy for "powerless" shareholders of a multi-billion dollar company. How could they not know what they were getting into before investing?