NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) has announced that it will team up with SharesPost Inc. to create an exchange for unlisted companies. This comes less than a month after it was revealed that NASDAQ has held discussions with the Carlyle Group about taking itself private.
Reuters reports that the new joint venture will be called Nasdaq Private Market, and NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) will be the majority owner. It could help the company with the reputation problems it has been having due to the role it played in Facebook Inc (NASDAQ:FB)’s botched IPO last year.
Since the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More
However SharesPost has had its share of problems as well. The company has faced problems with regulators after the Securities and Exchange Commission increased its scrutiny of electronic markets. The SEC charged SharesPost for its failure to register as a broker-dealer before it began to offer securities.
In order to settle those charges, the company paid a $100,000 fine and registered. SharesPost will continue to operate its investment advisory and broker-dealer business apart from the joint venture. A University of Florida finance professor interviewed by Reuters pointed out that the majority of “young companies” have their IPO on the NASDAQ, so by teaming up with NASDAQ OMX Group, Inc. (NASDAQ:NDAQ), SharesPost may be able to gain some of credibility.
In addition the Jumpstart Our Business Startups Act has paved the way for increased opportunities in the trading of unlisted company. The act boosted the number of shareholders unlisted companies can have up to 2,000 from 500 shareholders.