Netscape daddy's VC firm dumps $60m of Facebook stock

Facebook director Marc Andreessen's venture capital firm has sold off a chunk of its stake in the social network, netting itself around $60m. Andreessen Horowitz offloaded 1.2 million shares in the firm at between $49 and just over $50, according to a regulatory filing by Facebook. Andreessen helped set up browser firm …

[lglethal]

Conflict of Interest anyone?

Isnt it just a teensy weensy bit of a conflict of interest for someone, lets call him Marc for examples sake, to be a director at a company, lets call that company facebook, just for example, and then for Marc to start an investment company, lets call it Andreesen Horowitz, and to then buy Shares in the first company, with which he's still a director?

That doesnt come across as just slightly inappropriate boardering on illegal conflict of interest? Anyone?

The fact that he's now offloaded the shares at a substantial profit just adds the icing to the cake of inappropriateness. No?

[Tiny Iota]

Re: Conflict of Interest anyone?

Err, no. A conflict of interest may arise if he held shares in a direct competitor. Loads of employees have shares in the company they work for. They are an incentive for you to contribute to the company's performance to help get the share price up. If you are wondering about insider dealing, directors of listed companies in the US at least have to declare in advance their plans to buy and sell stock in their own company. This is publicly available info and can be quite interesting ("oh look, the finance director must have needed a new house")

[Don Jefe]

Re: Conflict of Interest anyone?

It is entirely appropriate for a board member to trade shares of their companies. In fact trading in shares of their companies is how most board members are compensated for their role. The company usually provides annual travel and incidentals funds to the board but any real money is made in dabbling in company shares.

There are regulations about it all (although you have to get caught). You can't short your own companies, you can't provide non-board people with confidential information about your companies and you may be limited in the total amount of shares you hold at any given time. The last one is variable with the company and the industry and more than anything is a lawsuit prevention mechanism that prevents a single member from having too much power in the company.

[lglethal]

Re: Conflict of Interest anyone?

I dont have a problem with him buying and selling his personal shares in Facebook because he is a director there. My objection is that he has another company of which he is also a board member (founding member actually), and which is buying shares (or selling in this case) shares in his first company.

Do not tell me there is not a conflict of interest there. If he's doing his job properly at Facebook he knows when they are about to release good results in advance and also when they are releasing bad results. If his other company is then buying and selling stock in Facebook, they are taking advantage of the insider information and that is a conflict of interest.

And whilst people might claim that there's no advantage being taken, maybe he's not involved in the sales personally or whatever, the fact remains that if he is doing his job properly for his second company, then all it would take is a mention of something strategically important over a business lunch (of which there's of course no record) then his second company will be able to gain an unfair advantage. The only way to avoid this would be for his second company NOT to invest in Facebook in the first place.

Too much of this dodgy stuff is happening these days and the authorities just dont seem to care in the slightest.

[Pete 2]

No mis-stake

> still has a stake in social network

What? Like Van Helsing had a stake¹ in Dracula?

[1] Actually, he didn't. He used a knife through the heart. But that would not make much sense (as if that was a criterion).