SEC Investigating Second-Hand Private Company Stock Trading

Posted Dec 28, 2010

Even though companies like Facebook, LinkedIn, Twitter, and Zynga are private, you can still buy stock in them. The U.S. Securities and Exchange Commission (SEC) is now investigating the background of this private stock trading and is conducting investigations. The SEC sent out requests for information from the companies that facilitate the private company stock trading.

Every month the number of transactions have been increasing. Several major Wall Street firms have began to form investment pools to buy shares in those private companies as well. A lot of the shares are being sold by former employees at the companies.

?A decade ago, these companies would be public by now. Investors can now buy into these businesses and sellers can exit their already valuable stakes,? stated SharesPost CEO David Weir. SharesPost is one of the companies that lets people trade for stock in these private companies.

SecondMarket is another company that handles the stock trading of these private companies. Stock in Facebook is the most actively traded company in SecondMarket. SecondMarket was not asked for anything from the SEC formally or informally as of yet.

[New York Times]