Joonko – Bloomberg

My sense has always been that, if you are a public company, everything is securities fraud: You have to be scrupulously truthful in all of your public communications, and if investors can find the slightest arguable misstatement they will sue you for securities fraud. And if you are actually lying about your customers and revenue, you will go to prison.

At private startups, on the other hand, the rules have usually been a bit laxer. Not as a legal matter, but as a practical matter. Fewer people see your statements, for one thing…. Also, your stock does not trade continuously, so nobody can say “I was deceived by that interview you did and bought your stock.” ….


But my sense is also that private markets are the new public markets: As startups raise millions of dollars from institutions and individuals, and stay private longer, it does make more sense that the rules of public markets increasingly apply to private ones. These days, if you puff up your LinkedIn as a startup CEO, that can get you in just as much trouble as it would if you were a public-company CEO.

Source: Joonko – Bloomberg