Roundup: Parakey sour grapes, Facebook’s sexual predator problem & more

Here’s a summary of the latest action. See below for more:
1) Sour grapes for Parakey investors; they get no Facebook stock
2) Facebook facing legal trouble back East, this time for child-safety issues
3) Amazon launches Amazon MP3, a competitor to iTunes
4) Private equity firm Veronis Suhler Stevenson buys Vault.com

Parakey’s investors saw their money doubled when Facebook acquired, but got no stock — We’ve talked several insiders about the deal, and they confirm that Parakey (see our coverage of the company) was sold to Facebook for less than $4 million in cash, basically doubling the return for investors such as O’Reilly AlphaTech Ventures, MSD Capital, YCombinator, Thomvest, Paul Buchheit, Ron Conway and Warren Zide. On the one hand, that’s small win in VC terms. Most VCs sprinkle bets on many companies, hoping one company will get a huge hit, and they had hopes for Parakey. Techcrunch’s report asks whether investors were “left in the cold,” citing unnamed sources saying that Parakey founders Blake Ross and Joe Hewitt made off with a nice dollop of Facebook shares for their compensation. Facebook shares are desirable, because they’re expected to grow significantly in value. However, the people we talked with suggest that’s sour grapes, and offer a different story. One investor admitted he was somewhat disappointed (“everyone hopes for a good return,” he said). However, he added that the return size really wasn’t that big of an issue for him. Rather, he was more keen to see the Parakey project live on. Parakey had an interesting technology, though he worried it wouldn’t see the light of day. Hewitt, for example, is now working on Facebook’s iPhone. Another insider pointed out the deal’s 2x return was rendered in six months for most investors, which isn’t bad at all (Sequoia Capital, a firm that invested much earlier, may have gotten a slightly better deal, though we haven’t confirmed this). We’re told most investors didn’t spend that much time on the company, either. [Update: Ron Conway, another investor, just got back to us: “I’m not disgruntled” he said. “2x in 6 months isn’t too bad. I’m happy for the founders.”]

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Facebook facing legal trouble back East, this time for child-safety issues — Undercover investigators from the New York attorney general Andrew Cuomo’s office set up fake Facebook profiles posing as minors, found pornographic images and videos, and were repeatedly solicited by adult sexual predators. The office announced a full investigation yesterday, saying that Facebook’s safety features and its responses to complaints did not adequately address the issues.

True, the company is in hyper-growth mode, averaging 200,000 new users per day since January, and now has more than 42 million active users.

Still, being busy is no excuse for dealing with the exposure of children to pedophiles or others asking them for nude pics. Myspace has been in the spotlight for this problem for years, which Facebook managed to mostly avoid it while its core user base was college students. “If you wanted to stalk a young girl on Facebook, it would be very, very easy,” Myspace owner Rupert Murdoch said at a conference last week.

Facebook might want to check out Keibi, a newly-launched software service designed specifically to help social networks’ customer service teams find and delete porn faster. Facebook isn’t new to legal cases: Add this latest to the Massachusetts court case brought against Facebook by rival ConnectU, which claims that it invented online social networking on college campuses. And Facebook has been criticized for moving too slowly to address other sensitive issues, such dealing with its anti-Islam group.

Amazon launches Amazon MP3, a competitor to iTunes — Techmeme has more.

Private equity firm Veronis Suhler Stevenson buys Vault.com — Vault.com provides surveys and other career information for a range of professional industries: investment banking, consulting, law, government, media and others. The majority-stake investment values the company at between $60 and $85 million, the Wall Street Journal reports.