Why Wasn’t SecondMarket Part of the SEC Pre-IPO Stock Attack? CEO Barry Silbert’s Happy to Tell You on Quora.
It’s one thing to not be targeted in any regulatory action that strafed your competitors, but SecondMarket CEO Barry Silbert used the opportunity to tout just why his company missed the bullets.
In an unusual and interesting post on social answer service Quora, Silbert gave a long answer to the question entrepreneur Jason Calacanis asked there: “Why wasn’t SecondMarket part of the SharesPost/secondary market SEC action today?”
That would be the investigation by the Securities and Exchange Commission, which filed charges, as Arik Hesseldahl wrote earlier this week, “against two managers of private funds that had raised more than $70 million to acquire and trade pre-IPO shares of Facebook and other tech companies with misleading investors and charging undisclosed fees. It also brought charges against SharesPost, saying it had engaged in securities transactions without being registered as a broker-dealer.”
The move was part of a year-long inquiry aimed at secondary markets, where firms trade privately owned shares and options of pre-IPO companies.
Silbert, who runs one of the biggest companies in this sector, apparently decided to make hay while the Feds shone (up). In the Quora post, he noted: “I am proud to say that SecondMarket is not among those investigated or charged, which only reinforces SecondMarket’s ongoing commitment to being the trusted, compliant and fully-regulated marketplace in the startup and private company ecosystem.”
If he does say so himself!
All kidding aside, it is actually a novel way to turn a story that could tarnish everyone nearby into a plus. (Plus, ABC — Always Be Closing!)
Among the reasons that Silbert said SecondMarket was not part of the government probe: “Fully regulated, soup to nuts, from the start” (the company is a registered broker-dealer; “close coordination with private companies on all transactions” (“customized secondary markets,” he noted); “rigid accreditation process” of buyers; and “no disclosure of private company valuation and pricing.”