Doesn't anyone else see a huge opportunity here? If we set aside regulation for a moment, there is a _huge_ demand for a liquid market for privately held stock. Both investors and companies would have huge benefits from being able to trade stock on a market that's not connected to the traditional exchanges. I'm standing on the investor side of things, annoyed out of my head that it is impossible to invest in the companies I'd want to unless I had a hundred million dollars.
There are probably _huge_ regulatory hurdles to a problem like this, but it would be interesting to see where the excact problem lies. Practically, you'd need to attract enough investors to make the market reasonably liquid, as well as gain enough confidence from the market at large that people would want to participate.
Does anyone know what regulation prevents someone from doing this?
> Does anyone know what regulation prevents someone from doing this?
The same regulation that pretty much defines modern securities - the Securities Act of 1933. It basically states that securities cannot be offered to the public without first being registered with the SEC, and the company must report all material information related to the security - essentially these requirements are the reasons that companies are avoiding IPOs in the first place.
> there is a _huge_ demand for a liquid market for privately held stock
Privately held stock is, by definition, privately held and not publicly offered on a liquid market. The only potential loophole I see here is that accredited investors (individuals w/ net worth > $1 mil or income > $200k/yr) are exempt from these rules as they are considered "sophisticated investors". However, a market that's only open to accredited investors probably wouldn't be very liquid.
Hehe, forgive _my_ ignorance..these companies are doing pretty much what I was suggesting. I'm not that versed in the details of reasonably young companies.
There are probably _huge_ regulatory hurdles to a problem like this, but it would be interesting to see where the excact problem lies. Practically, you'd need to attract enough investors to make the market reasonably liquid, as well as gain enough confidence from the market at large that people would want to participate.
Does anyone know what regulation prevents someone from doing this?