John Harding’s book, Escape from Paradise – Paperback and Kindle Versions


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Now, available in Kindle and Paperback! Free Kindle if you purchase Paperback. After buying Paperback, go for the free Kindle!

It took me two and a half evenings to complete your un-put-downable book…it is a unique contribution to the appreciation of a life in Singapore. Thank you for having written it. C. V. Devan Nair, former President of Singapore.

Bought the book from Select this weekend and can’t put it down! It’s a great read! And so nostalgic for me—the good old days! Glen Goei, writer and director of the Miramax film That’s the Way I Like It and who played the title role opposite Anthony Hopkins in the London production of M. Butterfly. Mr. Goei’s latest film is The Blue Mansion – Click for the trailer!

It is a remarkable story and so full of intrigue that it reads at times like fiction.Jonathan Burnham, Editor in Chief & President, Talk Miramax Books.

“It’s quite a story The legendary Alice Mayhew, Vice-President & Editorial Director, Simon & Schuster.

This book out-Dallas, Dallas. No one has written so well of the other side of paradise,Francis T. Seow, former Solicitor General of Singapore

ThunderBall Films is successfully putting together the movie production of Escape from Paradise and has received a new LOI (Letter of Intent) from actress Bai Ling who starred with Richard Gere in the film Red Cross.

This includes a commitment from a CPA firm who does tax credit financing in Ireland, a possible location to film, as part of the package needed for investors – along with the CPA firm’s commitment to apply for and finance the tax credits if ThunderBall does shoot in Ireland and what portion of the budget they would provide.
For inquiries, please contact John Harding at jbharding@gmail.com.

Escape from Paradise – the Promotional Trailer

Unraveling the unraveling of Facebook

What a deal!

Here’s all you need to know about the Facebook IPO in short simple terms that anyone can understand.

Zuckerberg

Zuckerberg

At the last moment of its IPO, greedy Facebook said the number of shares for sale would be increased to 421 million, 25% more than it had previously planned to offer.

Few investors knew that the bulk of the shares were being sold by Zuckerberg and friends—and that far fewer shares were being sold to finance Facebook.

Zuckerberg and friends raked in $9.2 billion while Facebook received “only” $6.8 billion.

The investors were paying off Facebook insiders far more than they were investing in Facebook.

Of the $38 per share price that the investors were coughing up, only $16.24 was going to Facebook, while a whopping $21.76 was going into the pockets of Zuckerberg and friends.

Bad? It gets worse.

The investors were buying Facebook “Class A” shares which have very little voting power—almost none.

After the IPO, Zuckerberg and friends still hold an incredible 1,780,535,644 shares of Class B common stock. These Class B shares are valued at $66.7 billion as they are convertible into Class A shares.

Here’s the kicker: The Facebook prospectus states, “Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to ten votes.”

Jamie Dimon

JPMorgan Chief Jamie Dimon puts another one over on the public

Doing the math we see that the investors Class A shares lumped together have only 4.1% of the votes while the Class B shares belonging to Zuckerberg and friends have a whopping 95.9% of the votes.

The Facebook investors will have absolutely no say in the running of Facebook.

Stockholder meetings will be a joke—if they even bother to have them.

The Facebook IPO is the biggest rip-off in history. Zuckerberg alone is not to blame.

The lead banker, Morgan Stanley, assisted  by the  now-notorious Jamie Dimon of JPMorgan, structured the deal. For their work, Morgan Stanley and the other underwriters were paid roughly $170 million in fees for handling the IPO and raking in the investors.

Then there were the Nasdaq “problem.” It was claimed that the I.P.O’s unprecedented size presented an enormous challenge for Nasdaq. This is misleading to put it in polite terms. Nasdaq normally trades 1.5 trillion shares a day. True, the IPO was 400+ million  shares, but Nasdaq could cope with that. Nasdaq’s “failure” in confirmation of clients” trades led to unprecedented confusion and later chaos. A number of investors dumped shares on the first day due to the confusion which send the shares plummeting below their IPO price, when the underwriters had step in.

So we have two stories regarding Nasdaq – too much volume and a failure to confirm clients’ trades. Over the course of time, other excuses and misinformation will surely emerge. The fact is that Nasdaq was colluding with JPMorgan and friends to keep Faceback shares from crashing in value during the IPO. This did work—during the IPO—but the stock price crashed anyway.

There are thousands of shares listed on  was listed. Morgan Stanley, her former employer and lead banker for the offering, also faced questions about its role in the I.P.O.

The investors finally woke up and filed suit in Manhattan federal court on May 23 against Facebook, Zuckerberg, and underwriters Morgan Stanley, J.P. Morgan, Goldman, Sachs & Co., Bofa Merrill Lynch, Barclays Capital, Allen & Company LLC., (the usual suspects) accusing them of misleading them about the company’s financial prospects.

Shareholders said research analysts at several underwriters had lowered their business forecasts for Facebook during the IPO process, but that these changes were “selectively disclosed by defendants to certain preferred investors” rather than to the public generally.

In other words, Wall Street knew what was going down, but Main Street was left in the dark.

So, what else is new?

May 31st update: Morgan Stanley CEO James Gorman dismissed outrage over Facebook’s botched initial public offering, calling investors who had expected immediate gains “naïve” for having “bought it under the wrong pretences”. Huh? Should the investors have expected to take heavy losses, James? Should the investors have expected Facebook to break all previous records for dollar value lost on a new IPO?

James Gorman didn’t stop his con job there—he also defended the decision to expand the size of the IPO, saying, “We had unprecedented retail demand?” Maybe he should have said, “We had unprecedented greed on our part.”

Then Gorman tried to lay some blame on Nasdaq for sowing “confusion” on Facebook’s first day of trading. As we pointed out, above, Nasdaq’s “computer glitches” were actually done to protect Gorman’s Morgan Stanley and the other underwriters—the usual suspects.

Finally, seeking a bit of undeserved sympathy, Gorman said “Give this a little bit of time … We’re only on day eight here.”

Scott Sweet, senior managing partner at investor advisory firm, IPO Boutique, said: “Anything that makes it seem as though it wasn’t that bad is wrong. This does not happen with deals like this. This happens with fourth-tier underwriters.”

Scott was nearly right, he should have said “This happens with crooked underwriters.”

June 2nd update: 

REUTERS reported that, on June 4,  Facebook’s website suffered sporadic outages on Thursday, anywhere from half an hour to two hours according to various blogs, tweets and affected users, but the company said the problem has been fixed. This is yet another example of our young techies failure to understand how to build a datacenter. It’s not their fault—blame in on the educational system which believes the world begins and ends with PCs. The PC-oriented datacenter is a mass of PCs all hooked together by external (and slow) wires to communicate between them. Throw out that junk and install IBM mainframes using Sysplex to keep them in sync. If one goes down the other jumps in immediately. There is also a major savings in rent, air-conditioning, and even wires.

Notes:

From the prospectus

The Facebook prospectus states, “Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to ten votes and is convertible at any time into one share of Class A common stock. The holders of our outstanding shares of Class B common stock will hold approximately 95.9% of the voting power of our outstanding capital stock following this offering, and our founder, Chairman, and CEO, Mark Zuckerberg, will hold or have the ability to control approximately 55.8% of the voting power of our outstanding capital stock following this offering.”

CLASS A COMMON STOCK
Facebook, Inc. is offering 180,000,000 shares of its Class A common stock and the selling stockholders are offering 241,233,615 shares of Class A common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. This is our initial public offering and no public market currently exists for our shares of Class A common stock. We anticipate that the initial public offering price will be between $34.00 and $38.00 per share.

We have two classes of common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except voting and conversion rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to ten votes and is convertible at any time into one share of Class A common stock. The holders of our outstanding shares of Class B common stock will hold approximately 95.9% of the voting power of our outstanding capital stock following this offering, and our founder, Chairman, and CEO, Mark Zuckerberg, will hold or have the ability to control approximately 55.8% of the voting power of our outstanding capital stock following this offering.

The money

For the mathematically inclined, Zuckerberg and friends sold 241,233,615 Class A shares for $9,166,877,370 while Facebook sold 180,000,000 Class A shares for $6,840,000,000.

No control for the public shareholders,  only for the insiders

No Class B shares were sold to the public.

23 comments to Unraveling the unraveling of Facebook

  • Benjamin R

    Facebook is facing the fate of My Space!!!!

  • IGO367

    Yup! Investors were taken!

  • MansalR21

    and there goes the fate of the investors! Bail out people!@#@

  • Jammie Flintstein

    John,
    thank you for explaining all this to us!!!What a crooked deal. It’s illegal isn’t it?
    Jammie F

  • Ian M

    I have invested in FB. It does not look good.
    I’m going to sell while I can get some money back!
    Ian M
    USA

  • Tom A

    You can’t trust Wall Street, you can’t trust the damn banks!
    best i keep my money under my mattress. This is truly insane!!!!!!!!!!!!

  • Jennifer

    thank you thank you. I am bailing out, this is way too dicey for me!

  • Gavin B

    Thank You for this information. I have invested in Facebook, and from what I have read, I don’t think this investment is going to work for me. Once again, thanks John!
    Gavin B

  • Lying to the People

    You can’t tell me Zuckerburg didn’t know that the “insiders”, the bankers, wall street guys were all going to get the good stuff, and we the investors, were lied to!!
    lying to the people

  • Carl

    I understand that Zuckerburg, with all the money is planning to LEAVE Facebook???

  • Kelly

    Zuck’s sis, Randi Zuckerburg’s leaving FB.
    Got the kaching from the idiots who invested in her bro’s FB! Hahahahahaha!!!!!!!

  • Chuck

    John,
    many thanks for the clear explanation. I have read other articles and posts, but never as good and concise as yours. Greatly appreciated!
    best regards,
    Chuck

  • Billy

    Hey John,
    we got the co-founder, Eduardo Saverin living here in Singapore. He drives a Bentley,lives at the ION Building 5,000sq ft penthouse in Orchard Rd and has a zillions girls chasing him!
    Save his tax money. Must have read your book. A must buy!!!
    Billy

  • Josie

    Zuckerburg’s FB’ stock has taken a hugh tumble. The lawfirm that won a $7billion lawsuit against Enron is now after him
    A separate suit just filed in California by investor Darryl Lazar, claims that the social network’s share prospectus contained “materially false and misleading statements”.

    FB’s bankers and its early investors have profited handsomely from the float, are going to face all this the legal suits come down on them, many many more to follow.

    Both lawsuits claim that certain investors had access to information that would have dented confidence in the shares, while others were left in the dark.

    As one reader had said, “You can’ttell me Zuckerburg did not KNOW about all of this!”…HAH!

  • Charmaine

    The people at Facebook, and all those who took part in its IPO displayed pure greed, total incompetence!
    Time to pay the piper. Microsoft and Google offered products, but FB’s offer of social media at this reckless and alledgedly fraudulent behavior of its people and Wall Street is a huge debacle and will certainly implode.
    In my opinion, fraud was committed!

  • Richard

    Slowly, a picture is emerging of what went wrong. And US regulators are being urged to intervene: the top securities regulator in Massachusetts has issued a subpoena to Facebook’s lead adviser, Morgan Stanley, to find out more about its discussions with lead investors.
    Facebook has a new nickname…Fadebook.

    I know that the FB shareholders have filed a lawsuit at the Manhattan district court a couple of days ago accusing Facebook’s Mark Zuckerberg, and his bankers, which includes Morgan Stanley, of concealing from them a “severe and pronounced reduction” in revenue growth forecasts.

    When one group of people feel that they are entitled to special price shares, and the masses who are planning to invest are NOT getting in on the same deal, this is fraud. Plain and simple!
    What a bunch of white-collar criminals!

  • Sheila

    Goldman Sachs is selling FB shares…hint hint! get out get out!
    Fadebook, the next dot.com bubble.

  • Rh

    Jamie Dimon is CEO of JP Morgan distinctly different bank than Morgan Stanley.

    • admin

      Oops. Love to say we were just testing you, but we have now corrected our little error. This is not to say that Jamie Dimon might not someday become CEO of a new firm called JP Morgan Stanley. Anything can happen.
      Thanks!

  • Steve

    Fools are born everyday. Those who have invested in the Facebook IPO will soon be looking at a range of $13-$11 a share in a couple of years! FB shares are risky business right now. Paying for “social media”…monetizing is the big Q huh?

  • Julie

    John,
    I wonder if these same crook banks will buy the dumped FB shares to hold up its price?
    I mean…it’s Memorial Day here, and nothings’ happening???

  • Meg

    Facebook’s going to let kids in now…wonderful!#@% yes yes, i know there are kids faking as adults on FB!