Michael Brown has abruptly left his post as corporate development manager for Facebook amid talk that he engaged in a private marketplace equivalent of insider trading.
Two months ahead of the Goldman Sachs-led investment in Facebook coming to light, Brown bought shares on a secondary market venue — such as SecondMarket or SharesPost, although exactly where and how he bought the stock hasn’t been revealed.
TechCrunch says that several sources have confirmed his action, which Facebook considers a form of insider trading and grounds for immediate termination, a policy well-communicated throughout the company.
Brown bought the shares in September 2010, while the Goldman Sachs-led investment came to light at the beginning of 2011. Some might argue that his timing would have preceded any knowledge of the erstwhile bank’s involvement, except that transactions of that size don’t happen overnight.
Apparently, Brown’s trades were what TechCrunch calls “relatively small,” but that would seem like a minor detail in the eyes of the Securities and Exchanges Commission. The SEC doubtlessly regards this development as validating the agency’s concerns about the risks inherent in allowing privately-held companies to trade shares on venues resembling those that move public stocks.
Now, it has crossed our minds that this news just so happens to have hit the wires on April 1, but we’re not sure whether this is the sort of thing that anyone would want to joke about. Readers, what do you think of this development, and how might it decide the future of private stock transactions?