Facebook Inc (NASDAQ:FB) and SEC issues crop up during the growth of Smartphone users

Facebook Inc(NASDAQ:FB ) filed a proposal to go public, on the 1st of February, but it was definitely not a very smooth time for the social-networking site which began eight years ago, when student Mark Zuckerberg and his friends at Harvard had come up with a little something after endless coding. It swiftly became popular all over the world, and now stands to connect people from various countries together. It had become so wildly popular, that investors and advertisers became eager to be a part of the phenomenon.

Facebook, before its public offering, was constantly talking about the effectiveness of advertisements, and the site also referenced Neilson, which is an audience counting company. But Barbara Jacobs, who is an assistant director for the branch of corporation finance in the U.S Securities and Exchange Commission body, called the site out on their game. Before the filing was sanctioned, she demanded that all investors know about all the material information there is to be given out. She demanded that they provide all the information and that they get Neilson’s consent. Facebook could do neither.

According to SEC, Facebook has a very dodgy management system, and even the basic details are being skimmed over hastily. The management was being very hesitant about revealing crucial information, and that such habits are not nice before an initial public offering.

The social-networking site faces serious dangers of earning money, now that the number of people who access the site through their mobile devices, are increasing. These users do not get to see as many advertisements, which would naturally make the sponsors very hesitant to put up their ads on the site. This information was being held back from the investors till SEC intervened and made Facebook come clean, which they had to.

On the 9th of may, which was only eight days before the IPO, Facebook managed to reveal how their revenue was undergoing a serious downwards spiral because of the growing number of mobile users. Out of the one billion people who use Facebook, 600 million use their phones to access the site. And this number is steadily on the rise.

Some analysts maintain, however, that getting into trouble with SEC days before the IPO is not unnatural for big companies.