loupagliaA Secondary Market For Private Company Stock
I see the attraction of the secondary market, good point, but I question this much more from a standpoint of business fundamentals. And it simply may be that I don't understand enough about it at this point. First, I think it is great that founders can benefit from a liquidity event, it is a reward for the risk. However, this strikes me close to creating massive "insider" risk.
Can only certain employees sell on the private market? Only ex-employees? What stops an "insider" who knows something about what the company strategic about the firm or something that will certainly erode/de-grade the upside of the firm, so they sell their stock privately at the "height" of perceived valuation. And does the fact that these insiders are selling harm the market valuation for other shareholders similar to the way free markets question when a senior executive is unloading their holdings?
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- Lou Paglia
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