When is a public company not a public company?

Under SEC rules any company with more than 500 shareholders is a public company and is required to furnish quarterly reports of gains and losses, liabilities, debts, sales, and so forth. That's for openers, in fact the SEC requires public companies to jump thru a large number of expensive hoops.
Facebook is a private company with less than 500 shareholders. They want to remain a private company. They also want to raise capital by selling stock. According to the Wall St Journal, one of the 500 Facebook shareholders is brokerage house Goldman Sachs. Goldman, having a lot of cash, bought a lot of Facebook shares. Goldman has now created a "special investment vehicle" backed by the Facebook shares, and is selling "special investment vehicle" shares to eager investors. Goldman salespersons say that owning shares in the "special investment vehicle" is as good as owning real Facebook shares.
In short, Facebook and Goldman Sachs have discovered a way for a private company to sell stock and avoid SEC reporting requirements (and doubtless much burdensome SEC regulation as well).
I'm of mixed minds about this scheme. The SEC, created after the 1929 crash, is supposed to prevent 1929 from happening again. I think most people will agree that the SEC has failed to do so. So, perhaps much burdensome SEC regulation should be abolished.
On the other hand, investors really need to know if a company is making or losing money, which is the purpose of the quarterly reports. Companies would not disclose such information unless required to do so by law. It isn't fair to let one company avoid reporting when it's competitors are required to report.