Facebook's own CEO Mark Zuckerberg, could be an issue as the company aims to go public, according to an alleged J.P. Morgan document and Facebook's SEC filing.
Fox Business News correspondent Charles Gasparino is claiming that an internal J.P. Morgan document discussing Facebook's IPO cites Zuckerberg as a "risk factor." No other details were revealed in Gasparino's teasing tweet, but the correspondent promised to reveal more information on "FBN@11am."
But beyond Gasparino's limited tweet, Facebook's own S-1 filing with the Securities and Exchange Commission highlights some potential risk factors concerning Zuckerberg.
After the company goes public, Zuckerberg will "own or have the ability to control approximately 57.3 percent of the voting power" of the company's outstanding capital shares, according to the SEC filing. As such, that means the CEO will be able to control certain matters up for approval by the investors, including the election of board members as well as the management and direction of Facebook itself.
What if Zuckerberg's own interests differ from those of the stockholders?
"As a board member and officer, Mr. Zuckerberg owes a fiduciary duty to our stockholders and must act in good faith in a manner he reasonably believes to be in the best interests of our stockholders," the filing noted. "As a stockholder, even a controlling stockholder, Mr. Zuckerberg is entitled to vote his shares, and shares over which he has voting control as a result of voting agreements, in his own interests, which may not always be in the interests of our stockholders generally."
Also, in his selling spree Mark Zuckerberg may sell about $1.7 billion of Facebook stock in the company's initial public offer to pay off taxes he will owe when he exercises options to buy 120 million shares.
Facebook's roadshow is scheduled for Monday with the IPO on track for May 17 or 18.
But will the risk factors cited in the SEC filing have any impact on the IPO? Doubtful given all the demand for shares in what's likely to be the biggest Internet IPO ever.
