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How Wall Street Middlemen Help Silicon Valley Employees Cash in Early

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Re: How Wall Street Middlemen Help Silicon Valley Employees Cash in Early

#31

Post by refurb »

themagician wrote: post #23
rday wrote: post #19

Earlier quoted context omitted.

I don't think the gambling analogy works here. You can't invest 5 dollars in a company 1000 times until you have no money left. Also gambling odds are heavily controlled. Could you imagine a pit boss telling you "Table 5's die have an unfair advantage to land on 7"? Conversely, people raising money tell you exactly why they will succeed and why they are a better choice than some other company. These people can be ver…

That analogy isn't about odds. It's about the why. The reason we don't let 99% of people buy shares of private companies has NOTHING to do with protecting the wealth of the 99%. Nothing. Zero. And to pretend like people with less than a million dollars in liquid assets are "too dumb" or "inexperienced" to purchase something is beyond insulting. It has everything to do with creating a private market where the 1% can g…

The reason we don't let 99% of people buy shares of private companies has NOTHING to do with protecting the wealth of the 99%. Nothing. Zero.

You seem pretty confident in your hypothesis. Have you gone back and looked at what drove the change in regulations? It's not like these regulations are passed with supporting evidence. The regulation was passed in 1933, right after the crash.

Between protecting investors and "creating a private market for the 1%", I'm thinking the first seems more rational.

Re: How Wall Street Middlemen Help Silicon Valley Employees Cash in Early

#32

Post by themagician »

sjg007 wrote: post #29
themagician wrote: post #23

Earlier quoted context omitted.

That analogy isn't about odds. It's about the why. The reason we don't let 99% of people buy shares of private companies has NOTHING to do with protecting the wealth of the 99%. Nothing. Zero. And to pretend like people with less than a million dollars in liquid assets are "too dumb" or "inexperienced" to purchase something is beyond insulting. It has everything to do with creating a private market where the 1% can g…

The new SEC rules that just went into effect should allow this right?

No. In fact, the SEC is trying to raise the limit to $2.5 million now because there are too many millionaires.

Re: How Wall Street Middlemen Help Silicon Valley Employees Cash in Early

#33

Post by ryan-c »

kelukelugames wrote: post #14
sohailprasad wrote: post #12

I'm the CEO of Equidate, one of the companies profiled in this article. The article raises excellent points on the pitfalls of trading pre-IPO stock on secondary markets. The opportunity is risky to be sure, only for educated investors as ready and able to lose money as to make money. Information is limited and protections are only as good as the integrity of the participants. That puts a premium on honestly, transpa…

Hi, I know people have sold my company's shares on the secondary market before. Is there a way to find out the selling price?

The best way is to ask them - my experience has been that people tend to be fairly comfortable discussing per share prices.

I used to work at Palantir. If I want to know what my shares are worth, GSV (which is publicly traded) owns Palantir common and preferred shares (as well as shares in several other private companies) and reports a fair market value in their public 10-Q and 10-K filings. This is useful as a baseline sanity check. There are also enough interested buyers that it's feasible to get multiple price quotes.

Re: How Wall Street Middlemen Help Silicon Valley Employees Cash in Early

#34

Post by notjustsox »

ScottBurson wrote: post #11

So this is where Sarbanes-Oxley has gotten us: to where it's so painful to run a public company that companies put off their IPO much longer than they would have, so people figure out how to trade the stocks anyway -- but in doing that, they have to go on far less information than they would have had, pre-Sarbanes-Oxley, when the company would already be public. The law of unintended consequences is alive and well.

SOX was so powerful that it managed to caused an 80% decrease in IPOs before it was even passed! And then, after it was passed and enacted, IPOs went down by -174%. Oh sorry, that means that once it was passed and enacted, IPOs went back up by 174%.

There are a lot of factors at work here, ranging from macroeconomic factors, to changing industry structures in both tech and finance. SoX is a factor to be sure, but it's not the only factor.

And besides... if SoX means I get liquidity on private company shares, then hooray for SoX.

Re: How Wall Street Middlemen Help Silicon Valley Employees Cash in Early

#36

Post by notjustsox »

mattmanser wrote: post #35

Why are you hiding behind an anon account to post this?

Because SoX is a dog whistle. If you point out that the real situation is more complicated, or if you bring in basic data like http://blog.thomsonreuters.com/wp-content/uploads/2014/01/HK... which can illustrate changing market and global dynamics, you can guarantee that some rabid assholes will harangue you.

So rather than have that heaped at my account, I used a sock puppet.

I think it's pretty gross that you called me out on it.

But hey, thanks for helping to prove my point. Now I'll fuck off because I don't give a fuck what else an asshole like you might say.

Re: How Wall Street Middlemen Help Silicon Valley Employees Cash in Early

#37

Post by yellowstuff »

pthreads wrote: post #15
sohailprasad wrote: post #12

I'm the CEO of Equidate, one of the companies profiled in this article. The article raises excellent points on the pitfalls of trading pre-IPO stock on secondary markets. The opportunity is risky to be sure, only for educated investors as ready and able to lose money as to make money. Information is limited and protections are only as good as the integrity of the participants. That puts a premium on honestly, transpa…

"Collectively, we owe it to founders and investors, and the economy, to create reliable secondary markets. That’s why Equidate was founded." No we don't! There are no reliable secondary markets and there is not going to be one simply because they are based on pure speculation. It exists for one reason only - shareholders of pre-IPO companies don't want to wait years and hence are willing to trade their shares for imm…

Valuing anything illiquid will involve a mix of rational analysis of inherent value and speculation, they can't really be separated. Pre-IPO companies are very illiquid and so could be prone to bubbles, and many knowledgeable people claim they are in a bubble right now. However, claiming that secondary markets are by necessity pure speculation is simply incorrect.

Your last paragraph doesn't make any sense to me. Mostly people sell equity shares on secondary markets. Equity shares are not derivatives. They can also sell stock options, which are derivatives, but are not created when they are sold on a secondary market. It sounds to me like all you know is that the word "derivatives" is scary, so things you don't like must be derivatives.

Re: How Wall Street Middlemen Help Silicon Valley Employees Cash in Early

#38

Post by DeBraid »

pthreads wrote: post #15
sohailprasad wrote: post #12

I'm the CEO of Equidate, one of the companies profiled in this article. The article raises excellent points on the pitfalls of trading pre-IPO stock on secondary markets. The opportunity is risky to be sure, only for educated investors as ready and able to lose money as to make money. Information is limited and protections are only as good as the integrity of the participants. That puts a premium on honestly, transpa…

"Collectively, we owe it to founders and investors, and the economy, to create reliable secondary markets. That’s why Equidate was founded." No we don't! There are no reliable secondary markets and there is not going to be one simply because they are based on pure speculation. It exists for one reason only - shareholders of pre-IPO companies don't want to wait years and hence are willing to trade their shares for imm…

Blaming derivatives is like citing the automobile for the reckless actions of the drunk driver behind the wheel. Derivatives are not inherently evil, nor is any 1 (longstanding) asset class.

Re: How Wall Street Middlemen Help Silicon Valley Employees Cash in Early

#39

Post by jacquesm »

notjustsox wrote: post #36
mattmanser wrote: post #35

Why are you hiding behind an anon account to post this?

Because SoX is a dog whistle. If you point out that the real situation is more complicated, or if you bring in basic data like http://blog.thomsonreuters.com/wp-content/uploads/2014/01/HK... which can illustrate changing market and global dynamics, you can guarantee that some rabid assholes will harangue you. So rather than have that heaped at my account, I used a sock puppet. I think it's pretty gross that you calle…

> Because I don't like dealing with assholes like you. Maybe that means I'm weaker than you. But whatever. You're a fucking jerk.

You had me until your final paragraph. For reference: you're the jerk and I'm flagging your account.

Re: How Wall Street Middlemen Help Silicon Valley Employees Cash in Early

#40

Post by ojbyrne »

soldergenie wrote: post #10

What happens in a market downturn and people suddenly holding private shares worth a lot less than what they paid for? Then, you have lawsuits from these holders claiming they didn't understand the risks of what they were investing in (e.g.: no financials statements, etc) and these schemes will start coming under the same regulatory scrutiny as public companies.

2 words: "accredited investors." 2 more words: "no recourse."
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