IPO Wealth vs. Headaches: Which would you prefer?
See article in San Jose Mercury News at:
http://www.mercurynews.com/ci_19327698?fb_comment_id=fbc_398751104966_13121403_398996589966
While this article is an interesting chronicle of the downside of going public, it can be worse for companies with broadly granted stock options (or restricted stock) and restless investors (angles and/or VC) who do not see an opportunity to realize any liquidity from their equity grants or investment. Motivating and retaining employees is a constant challenge regardless of the situation and at least this is a very positive, life altering one for many.
For those of you that have recently gone public, or work with new IPO companies, what are some of your experiences and lessons learned?
For concerns expressed in the article related to financial planning education and about insider trading , employees may want to visit the relevant sections about those topics on the website www.myStockOptions.com and www.insidertradingvideos.com
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Bruce:
Your white paper on Insider Trading is very accurate especially the part about tipping, even though that tippee does not do the trades for his/her own account but for others
How does tipping come into play with regard to Congress members apparently trading on inside information, when members like John Boener and Nancy Pelosi have stated that any trades made in their accounts were directed by others?
John Olagues
In response to your comment about members of Congress apparently trading on insider information. I assume you saw the "60 Minutes" program on Sunday about it http://www.cbsnews.com/8301-18560_162-57323527/congress-exempt-from-insider-trading-laws/?tag=currentVideoInfo;videoMetaInfo and a Wall Street Journal article back in 2010. The area of "outsider insider-trading trading" has long been unclear and left to the courts to work out the boundaries.
In short, there needs to be some type of fiduciary connection or contractual relationship, such as an outside lawyer, investment banker, or supplier using information they learn about their client to trade stocks. The "temporarily insider" theory of insider trading (has other names) had evolved.
Alternatively, the outsider needs to reasonably know that the insider is breaching a duty not to disclose, as with the current hedge fund cases. The current judicial approaches make it hard to charge someone like our esteemed elected officials, although it seems to violate other values. There are a few different laws proposed to ban certain types of stock trading by lawmakers now gaining more attention (see http://www.usatoday.com/news/washington/story/2011-11-16/congress-insider-trade-ban/51245468/1 )
Thanks for comments on the white paper on the site about the insider trading prevention videos (www.insidertradingvideos.com). If you're looking for more information, including a quiz to test your knowledge on insider trading, a Podcast, and other resources, see the SEC Law: Insider Trading (see http://bit.ly/tnRugE) section on www.myStockOptions.com .
I did not see the espisode on 60 minutes but I did hear a discussion on the radio a few days ago. I was outraged to learn that congress was exempt from insider trading laws. All of our other laws against criminal crimes apply to them.....this is so wrong!!!!
They are not exempt from the Insider Trading laws and rules. The SEC just refuses to enforce it against them because the SEC gets its funding from Congress. Nor will the SEC or the FBI enforce the law against too big to prosecute bankers, like Corzine, Dimon, Mack, Pandit and Paulson.
"This is the way the world ends
Not with a bang but a whimper".....T.S. Eliot