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An estimated $10-$30 billion in shares of pre-IPO startup companies trade in a financial market involving venture capital companies, hedge funds, employees of the startups, the startup companies, and public investors, outside the scrutiny of federal and state regulators. The SEC has issued only a couple of enforcement actions. Federal and state laws permit such pre-IPO trading of unregistered securities. As a result wealth is now created in large part even before the IPO happens as the prices are orchestrated up much earlier, and startups can as a result delay the actual IPO till about 6-7 years later on average.
Grouped Articles
How Wall Street Middlemen Help Silicon Valley Employees Cash In Early
Wall Street Journal 03.28.2015
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