How Wall Street Middlemen Help Silicon Valley Employees Cash In Early: Financial firms create ad hoc market where hot stocks of closely held technology companies trade largely out of sight of regulators.
Hedge-fund manager Jonathan Sands gushed in a January email that shareholders ofUber Technologies Inc. could quadruple their money in two to four years. “The numbers behind Uber are astounding,” he wrote.
The email was a sales pitch for an investment fund with $100 million of stock in the privately owned, smartphone-based car service, which Mr. Sands said he was getting “directly” from Uber to sell to other investors, minus a management fee and cut of the profits for himself.
He didn’t actually have any Uber shares to sell. But in a bustling intersection of Silicon Valley and Wall Street, Mr. Sands and other financial middlemen like him are creating a murky, ad hoc market where the red-hot stocks of closely held technology companies trade largely out of sight of regulators, other investors and the companies themselves.
Because up-and-comers like Uber, disappearing-message provider Snapchat Inc. and home-rental service Airbnb Inc. haven’t gone public, almost all of their stock is owned by venture-capital investors and employees... –Susan Pulliam, Telis Demos (Wall Street Journal).
Fantastic read.