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Lawmakers relish the opportunity to latch on to current events in order to craft legislation or a political message — and the controversy surrounding Facebook’s initial public offering last week was no exception.
Indeed, Facebook is getting the full Congress treatment, from bills and hearings to statements, press conferences and floor speeches. Last week, Democratic Sens. Charles Schumer (N.Y.) and Bob Casey (Pa.) introduced a bill penalizing Americans, such as Facebook co-founder Eduardo Saverin, who renounce their citizenship and avoid taxes. That same day, Sen. Carl Levin (D-Mich.) renewed his push to close stock option loopholes that he said would allow Facebook to claim it has “no taxable income for years to come.”
Now, following news of a lawsuit filed by stockholders against Facebook challenging the legitimacy of the IPO, prominent Congressional panels are beginning to probe the social media company. The Senate Banking and House Financial Services committees are conducting briefings on the matter, though the inquiries are not yet formal.
“There’s a lot that we don’t know about this IPO but a lot that we do,” said Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking Subcommittee on Financial Institutions and Consumer Protection. “We know that the [Securities and Exchange Commission] must fully investigate and take appropriate action if it discovers any violations. The conduct in this highly publicized IPO only reinforces that the Senate was mistaken in voting to remove oversight from approximately 98 percent of all IPOs — for companies making less than $1 billion per year.”
Though several Members, such as Brown, have expressed criticism over Facebook’s actions, it was not immediately clear when, or whether, formal action would be taken.
The Senate Banking Committee is in the middle of a series of investigations of the implementation of the 2010 Dodd-Frank Wall Street reform law. The capstone of that set of hearings is expected to come early next month when Jamie Dimon, head of JPMorgan Chase & Co., testifies before the panel about the bank’s multibillion-dollar losses.
“I have instructed my staff to conduct due diligence regarding issues raised in the news about Facebook’s IPO. My Banking Committee staff is coordinating bipartisan staff briefings with Facebook, regulators and other stakeholders,” Senate Banking Chairman Tim Johnson (D-S.D.) said in a statement Wednesday. “Once these briefings have concluded and the staff reports back to me, I will determine if a Senate Banking Committee hearing is necessary.”
A Congressional investigation would be a closely watched test of Facebook’s emerging influence inside the Beltway. The company, which opened its Washington, D.C., office in 2009, is widely regarded as one of the most Washington-savvy Internet companies. In comparison to its high-tech predecessors such as Google and Microsoft, which waited until they were in hot water to staff up on lobbyists, the company came early to the lobbying game. Facebook spent $1.35 million on lobbying last year.
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