NEW YORK ( TheStreet) -- Goldman Sachs ( GS) executives reportedly took a pass on a potential proprietary investment in Facebook, before buying shares for clients who couldn't get enough of the investment and charging them nearly 10 percent in fees, according to reports in The New York Times and The Wall Street Journal on Thursday.

The Journal reported that Goldman was "flooded with offers," from clients hoping to buy a stake in the privately-held company. As a result, many clients won't get nearly as large an allocation as they want, according to the report.

Goldman is able to buy as much as $1.5 billion in shares for clients, in an investment it has structured as a "special purpose vehicle" (SPV) allowing Facebook to skirt disclosure requirements for companies with more than 500 investors. The SPV will be treated as a single investor for legal purposes.

For its part, the Journal reports Goldman will collect an upfront fees of 4% in addition to a trailing 5% cut on any investment gains. Those fees could be in addition to a "private-placement fee" between 2% and 4% for arranging the deal.

But while Goldman's clients are reportedly chomping at the bit to buy Facebook shares, the head of a powerful Goldman private equity unit, Richard Friedman, passed on the deal, The New York Times reported.

According to the Times report, Friedman thought the investment placed too high a value on Facebook. While Friedman typically likes to take larger stakes than the one percent he would have been able to do in this case, he would have thrown out that criteria if he had seen the deal as an "easy home run," the report stated.

Goldman eventually invested $450 million in a deal that values the six year-old company at $50 billion, which is roughly one sixth the value of Apple ( AAPL) a quarter of Google ( GOOG)'s market cap and about two thirds as large as Amazon ( AMZN).

A Goldman Sachs spokesman declined to comment on the reports. An email to Facebook's press office wasn't immediately returned.

-- Written by Dan Freed in New York.
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