Swapping shares for cash

January 14, 2014

Fenwick & West corporate partner Matt Rossiter spoke with CNBC for a segment titled "Swapping shares for cash" on the "rise of the secondary market."

The segment opens with a discussion of how employees of many late-stage private companies could be worth “millions of dollars on paper” but can’t access that capital unless their companies exit through initial public offerings or acquisitions. What CNBC calls the “rising demand for the secondary market” is due in part to the JOBs Act's expansion of the number of shareholders a private company can have before it's forced to disclose financial information like a public company.

As paraphrased by CNBC, Rossiter said that the secondary market can be seen as a good thing because “it allows for different classes of companies” that “can encourage trading of their shares if it suits their business needs and objectives.”