Facebook Inc. (FB) (FB) is halting the trading of its shares on secondary markets by the beginning of April as it prepares for an initial public offering, two people with knowledge of the matter said.
Representatives of Facebook instructed firms that participate in trades of closely held companies to cease trading this week, said the people, who asked to not be identified because the conversations were private. The move gives Facebook time to account for its shareholding base as it makes final preparations for an IPO, the people said.
Facebook, which filed in February to raise $5 billion in the largest-ever Internet IPO, is actively traded on secondary markets, including SharesPost Inc. and SecondMarket Inc. A halt would end price fluctuations in private trading as Facebook confers with bankers and investors to determine an IPO valuation.
Jonathan Thaw, a spokesman for Menlo Park, California-based Facebook, declined to comment.
While the trading of startup shares lets early employees and investors make money from holdings, it has also come under regulatory scrutiny because the transactions can attract investors who may not understand the company and the risks involved.
Facebook's implied value dropped 5 percent to about $93 billion in a late-February auction of a fund that holds shares of the social-networking company's stock. The sale set a price of $40 apiece for 125,000 units of the fund, according to San Bruno, California-based SharesPost, which managed the auction. A Feb. 14 fund auction valued Facebook at about $98 billion.
To contact the reporters on this story: Douglas Macmillan in New York at dmacmillan3@bloomberg.net; Brian Womack in San Francisco at bwomack1@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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