"Goldman is doing nothing more sinister than creating an ad-hoc venture capital fund and using it to invest in Facebook. Does every California public employee also count as a Facebook shareholder if CalPERS is an LP of a VC that invests in Facebook?"
A venture capital fund is diversified over many investments -- that's why it's a fund. A venture capital "fund" that invests only in Facebook is a fund in name only.
Also, unless you're a lawyer specializing in securities law, I doubt you know the answer to your own question. State employees can (and do) initiate lawsuits against CALPERS, and CALPERS has sued public companies on behalf of state employees. The pensioners clearly have some rights as investors.
By your logic, CalPERS can't invest in any fund that invests in private companies, as that investment would instantaneously tip the company over the "500 investor" limit.
Meanwhile, what does diversification have to do with the structure of a venture capital fund?
"By your logic, CalPERS can't invest in any fund that invests in private companies, as that investment would instantaneously tip the company over the "500 investor" limit."
No, that's not what I said. I said that the investors clearly have rights -- presumably including the right to know the financial prospects for their investments. CalPERS invests some money in private equity funds and limited partnerships, but that just begs the original question. I don't know what the disclosure requirements are for companies involved in that kind of investment, but then, I'm not a securities law expert.
Do you actually know the answer, or are you just asking rhetorical questions in the hope that people will interpret your questions as statements of fact?
"Meanwhile, what does diversification have to do with the structure of a venture capital fund?"
You made a straw man argument that drew me into a straw man argument and here we are arguing about something totally irrelevant. Nobody is saying that investors have no rights.
Are you saying that if Matasano took funding from a VC that had CalPERS as a limited partner, we might have to make additional SEC-mandated disclosures to account for CalPERS investors? You're right: I can't tell you that I know that we wouldn't; I can only call "BS" and wait for someone else to add facts.
"You made a straw man argument that drew me into a straw man argument and here we are arguing about something totally irrelevant."
Not really. You argued that Goldman Sachs created a venture fund, and that therefore, Facebook is immune from disclosure laws. I'm saying that there's a substantial practical difference between a venture fund and what Goldman appears to be doing here (not the least of which are issues of investment diversity) and that, even if that weren't true, it's not clear that financial disclosure laws can be bypassed so easily (the CalPERS digression was yours). Other experts happen to agree on these points, so I don't think I'm coming out of left field.
But since I'm not one of those experts, and you don't seem to have any special knowledge beyond your own opinions on the matter, this thread is more heat than light. I'm done with it. Counterarguments aren't "straw men" just because they don't directly refute your original points.
A venture capital fund is diversified over many investments -- that's why it's a fund. A venture capital "fund" that invests only in Facebook is a fund in name only.
Also, unless you're a lawyer specializing in securities law, I doubt you know the answer to your own question. State employees can (and do) initiate lawsuits against CALPERS, and CALPERS has sued public companies on behalf of state employees. The pensioners clearly have some rights as investors.