Secondary Markets

SEC’s Yearlong Secondary Markets Investigation Reportedly Yields Charges Against SharesPost and Felix Investments [UPDATED]

Frank Mazzola

It looks like the Securities and Exchange Commission’s yearlong investigation into trading private shares on the secondary market may finally be coming to a close.

Yesterday afternoon, Bloomberg first reported that the SEC is preparing to bring civil charges against Felix Investments, a Wall Street broker-dealer perhaps best-known for its twin funds Facie Libre 1 and Facie Libre II–meaning face book in Latin. “The firm is expected to be accused of violating securities laws related to soliciting investors,” DealBook wrote in a follow-up, adding that Felix “aggressively accumulated” and actively promoted shares of companies like Facebook and Twitter, going as far as to cold-call Facebook employees to try to get them to sell.

The SEC is also reportedly “nearing a settlement” with SharesPost, an online platform for selling private shares.  “Regulators had expressed concern that SharesPost was not registered as a broker-dealer when it began facilitating trades in private company shares in 2009,” noted DealBook.  SecondMarket, a SharesPost competitor which registered as a broker-dealer early in its history, however, “is not the subject of an SEC inquiry,” spokesman Mark Murphy told Betabeat. Read More