NEW YORK ( TheStreet)--Here we go again.

Following reports that JPMorgan Chase ( JPM) has joined Goldman Sachs ( GS) in pitching social media investments to rich investors, it is a safe bet other Wall Street institutions will soon be falling all over themselves to copy the industry leaders.

And though Wall Street may just be getting started in pitching the latest hot Internet investments to clients, not a few veterans in the sector believe it has already gotten ahead of itself.

"The fear on the part of JPMorgan and Goldman is that someone else will supply it and start to roll up that relationship and take existing business away," says Michael Lipper, whose firm, Lipper Advisory Services, provides money management services for wealthy families, retirement plans and charitable organizations.

But offering these investments to clients is hardly without pitfalls. Take, for example, Goldman's agreement with Facebook to buy a stake in the private company and dole it out to wealth management customers. The deal was initially seen as a huge coup for the investment bank, though it later had to cancel the stake sale in the U.S. due to concerns regulators might determine Goldman had actively marketed the offering, which was supposed to be private, in violation of securities laws.

Probably more significant for those trying to gauge whether Internet companies are overvalued were a couple of followup reports suggesting Goldman's hot new Facebook opportunity might be a bit colder and a bit older than originally advertised.

First, The New York Times reported that Goldman's private equity unit had already passed on the chance to invest in Facebook.

Adding to signs Facebook's valuation had climbed too far too fast, Bloomberg reported that the opportunity had already been shopped around to other clients, such as Netscape founder Jim Clark, on better terms than the ones Goldman was offering.

Other concerns voiced to TheStreet by an investment banker who runs his own boutique firm are that many new Web-focused companies like Facebook, Twitter, Groupon and others don't need cash to expand. As a result, the banker says, the excess cash gets funneled to the companies' principals.

"How much is Facebook founder Mark Zuckerberg taking off the table?" the banker asks. "Doesn't that take the guy's eye off the ball a little bit as opposed to having options, where he can see every day how they do and he's motivated--that's the part I don't like."

But concerns like these are not nearly enough to stop the party. Reports this week say JPMorgan will offer clients a chance to invest in Twitter through a $1.22 billion Digital Growth Fund. JPMorgan will not invest directly in Twitter, but is investing in another fund run by investor Chris Sacca which has a Twitter stake, according to the blog TechCrunch.

Twitter founder Biz Stone told Reuters the company was not in talks with JPMorgan and didn't need additional funds, as some reports had suggested. Those statements, however, do not appear to rule out JPMorgan acquiring outstanding Twitter shares on the secondary market, which is what TechCrunch reported.

Both the Goldman and JPMorgan deals are notable for the fact that they appear to be orchestrated out of the wealth management arms of those institutions--traditionally not their most important businesses, but ones that may take on more influence as firms see greater profit potential there in the post-crisis landscape.

"Firms like JPMorgan and Goldman Sachs feel compelled to fill any perceived need of any of their clients and so the social network is good cocktail party talk and some people may want to participate," says money management adviser Lipper.

Lipper does not believe Goldman and JPMorgan are using the lure of a Facebook or Twitter investment to bring in new clients, though he says they may be trying to bring in new money from existing clients. Spokesmen for Goldman and JPMorgan declined all comment.

Goldman and JPMorgan's strategies point to the attractiveness of wealth management to banks as they retool themselves in the wake of the crisis. Goldman, Morgan Stanley ( MS), and Bank of America ( BAC) have been particularly aggressive in building up wealth management, though many other institutions have emphasized plans to grow in this area. And UBS ( UBS), a longtime industry leader damaged by a I.R.S. crackdown on tax evasion, is working hard to defend its turf.

"Wealth management is a generally a very profitable business, but there's some stiff reputational risk," says Derek Pilecki who runs hedge fund Gator Capital Management in Tampa, Fla. Pilecki notes the business is much more stable than lending or securities issuing, blowups from which were at the center of the recent crisis.

Despite the wealth management angle, good old fashioned initial public offerings are still a big part of Wall Street's latest fascination with Internet companies. A prime example is the more than 30% pop seen by shares of Demand Media ( DMD) on the day of its IPO Jan. 26. Goldman Sachs and Morgan Stanley were the lead underwriters. LinkedIn has also filed to go public, in a deal that will be led by JPMorgan, Morgan Stanley and Bank of America. Groupon is also reported to be eyeing an IPO that could value the company at $15 billion, according to The New York Times and other reports.

Watch also for the Wall Street hiring machine to join the fray. Among recent moves were Credit Suisse ( CS)'s luring of JPMorgan senior analyst Imran Khan into its investment banking ranks, as it tries to compete with alumnus and Silicon Valley fixture Frank Quattrone. JPMorgan lost little time in poaching Barclays PLC ( BCS) analyst Doug Anmuth to replace Khan, as TheStreet reported Tuesday.

As for Quattrone, he has emerged mostly unscathed from a lengthy legal battle in the wake of the first tech bubble, and is making lots of headway in winning business for his boutique firm Qatalyst Partners. He has also had some recruiting wins of his own, such as former Credit Suisse colleague George Boutros, who had been the Swiss bank's top tech banker following Quattrone's exit.

-- Written by Dan Freed in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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