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Facebook nets $500M from investment firms

January 3, 2011 12:00:00 AM PST
The social networking site Facebook has received a huge investment from two firms.Goldman Sachs made a $450 million investment into the company and a Russian investment firm, Digital Sky Technologies invested $50 million. Goldman has the right to sell part of its stake, up to $75 million, to the Russian firm.

Facebook could use the investment money to develop new products or purchase other companies.

The deal values the company at $50 billion.

The U.S. Securities and Exchange Commission is reportedly looking into the booming trade in privately held shares of popular social networking sites.

The extra attention could be because the trading of popular private startup shares triggers public disclosure of financial information (even if the startup hasn't filed for an initial public offering) once a company gathers 500 shareholders.

Facebook recently tightened its privacy settings after criticism that personal information was being disseminated without users' knowledge or permission. Founder Mark Zuckerberg was named Time magazine's "Person of the Year" and was the subject of a high-profile movie about Facebook's creation. Zuckerberg, who owns about a quarter of Facebook's shares, is one of the world's youngest billionaires.

The Associated Press contributed to this report.