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

Secondary Markets

The Future of SecondMarket In a World Without Private Facebook Shares

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In SecondMarket’s 2011 year-end report, Facebook beat out Twitter, Foursquare, Gilt Groupe, Hulu, Spotify, and more as the trading platform’s number one most-watched company. Facebook has 14,973 “watchers,” almost double the next-closest, Twitter at 7,854. More tellingly, according to public statements from CEO Barry Silbert, 30 percent of SecondMarket’s revenue came from trading private shares of Facebook stock, which will soon become a province of the public markets.

But to hear Mr. Silbert tell it, he’s coping with the loss just fine. After all, it’s not like they didn’t know this was coming. As Crain’s reports, on Wednesday, Mr. Silbert told the audience at an Xconomy forum on New York’s venture capital scene, “We’re completely prepared to fill the hole,” adding, “We’re hiring, and we have a lot of capital.” Read More