The Securities and Exchange Commission (SEC), the US watchdog, is set to assert its authority over private company share trading, with enforcement actions against two firms that facilitated investment in Facebook and other start-ups.
SharesPost, which runs a stock market for trading in private company shares, should immediately have registered as a broker-dealer, the SEC has decided. It was trading activity on SharesPost which gave potential investors a glimpse at the likely value of Facebook last year, even though the popular social network is only now planning to go public.
Investors have clamoured to be able to buy into hot tech companies such as Facebook, before they floated on the public stock market. The SEC has been looking into whether they were put at risk by trading in the absence of public information on firms' financial health.
The SEC also plans enforcement action against executives at Felix Investments, which created pools of Facebook shares for sale to the public.