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July 6, 2015updated 21 Oct 2016 5:52pm

US regulators probe tech share sales

Private trading in stocks like Uber under scrutiny

By Sam

The US Securities Exchange Commission (SEC) launched an investigation into the improper sale of shares in privately held booming technology firms such as Uber.

The Wall Street Journal reported that an investigation will focus on whether Hedge Funds are offering shares in companies through derivative transactions which would be illegal under the 2010 Dodd Frank Act.

Under the act derivative transfers, or swaps must be traded openly on an exchange which is licensed by the SEC.

The investigation began because of what is being described as a boom in transactions in shares in booming privately held technology companies using methods such as swaps.

It is thought that hedge funds are trying to offer employee owned shares through derivative transactions with reports that some are offering to trade shares that they subsequently try to source.

One company, Sand Hill Exchange, had a cease and desist order served and it allegedly broke Dodd Frank rules because trades weren’t registered on a national exchange. The firm settled without admitting breaches and paid a $20,000 penalty.

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