Facebook's lawyers have advised the social networking giant to stop trading shares on private exchanges, which could foreshadow the company's long-awaited initial public offering.

While outsiders currently can't buy shares of Palo Alto, Calif.-based Facebook, employees and investors such as Goldman Sachs and Russia's Digital Sky Technologies which previously bought shares privately are allowed to trade them on so-called secondary exchanges, which are closely watched by regulators.

Facebook already has more than 500 shareholders. Under federal securities law, that means it must report financial results to the U.S. Securities and Exchange Commission or file an IPO sometime early in the second quarter.

On Wednesday, Facebook's law firm, Fenwick & West, which has a large technology practice, advised Facebook to stop trading after Sharepost, a secondary exchange, said it had sold a block of 70,000 shares last week at $34 apiece. That would value Facebook around $80 billion.

Last year, insiders and analysts suggested CEO Mark Zuckerberg would hire investment banks, most likely Goldman Sachs, to mount an IPO that could value Facebook as high as $100 billion.

Last month, San Francisco-based game developer Zynga raised $1 billion in its IPO, the largest sum raised by an Internet company since Google's IPO in 2004.

Zynga has close ties to Facebook because as much as 80 percent of revenue derives from games played on Facebook. Zynga's shares Thursday opened at $9.65, valuing the company at $6.74 billion.