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SEC: No Stocks Allowed on Ebay
Rude Turnip writes "What won't people try to sell on Ebay? First it was 16 year old girls, then the planet earth then Ebay itself! In the latest round of auction hijinks, the SEC has issued a cease and desist order to prevent three people from selling *gasp* stocks on the popular auction site. Apparently, the individuals violated some regulations having to do with the sale of unregistered stock. Was this the case of another online investment scam or a bona fide attempt to conduct corporate finance in cyberspace? CNNfn has the scoop. "
What precisely is the difference between selling stocks on Ebay and selling them in those cattle market places where everyone has to wear a stupid coloured jacket? I can accept Authorisation/registration arguments, but this IS the internet we're talking about here... Can't the SEC provide a system (preferably open :-) that allows people to determine whether or not a sale is Legal? Surely being able to trade 24/7 is a Good Thing (tm) to those people out there making money off of Stocks?
On a different note, can anyone post an url to a story about the attempted 16-yr old sale?
----- Documentation is worth it just to be able to answer all your mail with 'RTFM' - Alan Cox.
It's a place for people to freely swap pieces of a company that they own in exchange for cash.
IANA-stock-market-historian, but it appears the SEC and regulation were basically regulatory mechanisms that arose into place to prevent abuses occurring during this transaction. Somehow, regulatory mechanisms have a way of becoming default laws, irrespective of how relevant they are.
It wouldn't surprise me if the stock market underwent as earth shaking a change as the retail world is undergoing, simply due to the unleashing of millions of people being able to freely trade with each other. It also wouldn't surprise me if the powers that be try to hold this back.
Of course, it's entirely possible that scams and unwholesome activities will run wild on the scary beast known as the "internet" (or "cyberspace" for the buzzword impaired). But ultimately, I think the reins will be lost. And ultimately, massive dergulation may be more productive than well-intentioned regulation.
Of course, it won't be idiot proof or conducive to a nanny-state. Any bets on how long it will be before a pensioned school teacher loses his life savings on e-bay stock trading?
L.
The key issue here is that these were "unregistered" stocks. A corporation cannot sell "stock" that is not either registered or exempt from registration. One of the primary purposes for registration is ensuring that the corporation has made adequate disclosure as to its financial situation and future expectations. Disclosure documents may often be close to indecipherable, but experts should be able to interpret them at least. Stocks can be exempt from registration when the potential buyers are limited to persons expected to have the ability to assess the corporation's financial situation without need of full-scale disclosure and registration procedures.
Selling stock in new or unkinown corporations, with no approved disclosure documentation, in a forum of largely clueless buyers is not a good thing. By preventing it, the SEC is behaving responsibly. Not all government regulation is beneficial, perhaps, but knee-jerk opposition to legitimate consumer protection seems foolish.
Michael Kerpan
Credo quia impossibilis -- Tertullian
the SEC has to make sure that certain individuals are not purchasing more than x% of a company without declaring it to both the company and the SEC. Think of the havoc it would cause if wealthy individuals were to purchase enough shares of a company anonymously that would result in them suddenly being the controlling member. the SEC with all its faults needs to maintain control so publicly held companies have some sort of stability.
We would also see instances of ceo's selling a bunch of stocks anonymously before the quarterly report goes out... (granted that could be monitored since the amount of their assets is public knowledge).
possibly the biggest nightmare this would open up for the SEC (and insider traders everywhere) would be a 24hour market (which i am all for). the big boys would no longer have the edge over the rest of us, knowing exactly where a stock will open at the next day. if they make the market 24/7 then nobody will sell stocks on ebay, since they can just as easily(and legally) sell on the market.
today's the 21st? i should mention echelon then, huh? i wonder how the nsa feels about the market?