The U.S. Securities and Exchange Commission (SEC) has launched a probe into the burgeoning “black market” of hot, privately held tech stock. The SEC investigation comes after the regulator observed a recent boom in the trading of such shares that was being conducted privately and thus outside the regulator’s rules.

The investigation is also examining the trend of companies selling employee-owned shares of private companies via complex derivatives transactions.

The so-called “middleman” companies have been offering to trade stock with the employees of private tech companies, which the SEC feels could be unlawful under the Dodd-Frank Act of 2010, which mandates that investors can only trade share swaps on a national securities exchange that hold a registration statement from the SEC.

According to research conducted by the Wall Street Journal there are currently 78 privately held, venture-capital-backed companies worth $1bn or more, totalling $310bn. That represents an increase of almost 50 percent. The rise in the number of valuable companies has created a market in share swaps due to the amount of privately held shares available for sale and increased investor awareness of the hot tech stocks.

Uber, valued at $40 billion and Airbnb, valued at $24 billion are two of the most actively traded and involved in the controversial derivatives products.

The SEC has thus far refused to identify the ‘middleman’ firms involved in the transactions.

Sign Up for Our Newsletters

Get notified of the best deals on our WordPress themes.

You May Also Like

Top Colleges Now Luring Promising Video Game Players With Lucrative Scholarships

Bucking the notion that video games use up time that would better…

Police Use Of Body Cams Turning Into Yet Another Gouging Opportunity By Contractors

Police departments have experienced great results using body cameras on their officers,…

The 10 Richest Teens in America (and a Few Other Places)

  There are people under the age of 18 that probably have…

The things stupid people in politics say

Sometimes I shake my head when I read something in the news…