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"The U.S. Securities and Exchange Commission (SEC) has launched a probe into trading with shares of privately owned companies, including Facebook and Twitter, the Wall Street Journal reports. \nServices such as SecondMarket have offered trading with privately owned stock for several years now; Facebook's valuations that are circulating around have mostly been based on these trades. However, even a privately owned company has obligations to disclose some financial information in certain cases. \nAccording to the SEC's Q&amp;A, even if a company has not registered a securities offering, it \"must file an Exchange Act registration statement if it has more than $10 million total assets and a class of equity securities, like common stock, with 500 or more shareholders; or it lists its securities on an exchange or on Nasdaq.\" \nWith huge funding rounds received by companies such as Facebook, Twitter, and most recently Groupon (though not yet officially confirmed), it's hard to imagine that they have less than 500 shareholders, as big funding rounds are often comprised of smaller investments by multiple investors. Furthermore, companies such as Secondmarket are in a bit of a gray zone, but one could easily argue they're a trading desk like any other. \nThe probe is at a preliminary stage, the WSJ reports, but if the SEC finds irregularities in private trading in any of these companies, they could ultimately be forced to go public, just like Google did in 2003. \nThis could have enormous implications for companies such as Facebook, which has been toying with the idea of an IPO but never really committed to it in any foreseeable time frame. Furthermore, it could impact future funding rounds for companies such as Groupon and Twitter. \nThanks to Grant Robertson for his help in preparing this post.\n[via WSJ]"^^<http://www.w3.org/2001/XMLSchema#string>
<http://mashable.com/2010/12/29/sec-probes-trading-facebook-twitter/>