Slashdot Mirror
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. "
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?