Interesting post today by Mark Boslet of PEhub on secondary markets and lawsuits. Specifically, can private companies take steps to shield themselves from lawsuits by disclosing private info such as financial results? Hmm. Wasn’t part of the reason to not go public the fact that you don’t have to disclose this stuff?
According to Mark’s piece:
“I think companies are saying, ‘I do want some information out there so there won’t be disparities of information,’” says Francis Currie, a partner at the law firm of Davis Polk & Wardwell.
According to Currie, the information most appropriate for disclosure includes a list of material risks facing a company’s business and recent financials, but not projections. The Securities and Exchange Commission hasn’t yet weighed in on the topic, but it is examining issues associated with secondary market trading, particularly the 500 shareholder threshold that forces private companies to disclose financials and other data. So more clarity could come from the SEC over time.
I have no idea why this subject fascinates me so much. I think it’s because we are seeing the evolution of a new type of stock exchange in response to market and regulatory pressure. Pretty cool stuff.
