The CEO of Valuewalk received a solicitation via Linkedin to invest in Facebook. We thought it was both humorous and scary that so many companies are being set up to defraud investors. It especially made no sense, since the CEO lives in America, and the site was only for UK investors. We decided to turn the joke on them. Below is a brief background followed by the message. We noted the name of the site, but removed the name of the person who sent it.
There is a new investment trend that’s got private investment companies making lucrative deals but at the cost of honest investors. Some of these companies are selling pre-IPO stocks from big companies like Facebook, before they are allowed for public trading. Moreover, the offers that the investors were getting were nothing like the offers they would get with a real IPO.
Despite the Securities and Exchange Commission’s lawsuit against private investment firm Felix Investments, the United States government wants to pass some new bills that would make it easier for private companies to take advantage of their investors. While most of the investors from the Silicon Valley have shown their support for these new bills, the former chief accountant for SEC, Lynn Turner doesn’t. In a recent statement, she said, “At a time when you have a record number of scams going on in private placements and hurting people, you are rolling back the protections.”
The general partner for New Enterprise Associates, Scott Sandell suggests more government regulation is necessary, “If these markets don’t get more regulated – which I think is a reasonable thing to do – they are almost certainly going to get shut down.”
Ian Sobieski, SharesPost investor and director of Venture Fund Band of Angels, offers his two cents, “You have got to worry about the fly-by-night operations. They are doing a work-around of the SEC rules.”
Companies that offer pre-IPO stock trades sounds like a very shady practice and it’s not really recommended.
Below is the message:
Dear Mr Wolinsky
We have recently launched a new system for certifying individuals for qualifying for IPOs and Investment Opportunities called the www.sophisticatedinvestorregister.com Its the only “global” registry of its kind. We can also help companies qualify their current investor base to ensure they have high net worth investors. This is the way of the future for those who want to be contacted for IPOs, as its one of the only regulatory exemptions left for companies like Facebook, etc.
If you have a moment, take a look at the free process and give me your thoughts if there is anyway we can work together.