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Originally Posted by Slappin Fish
"....it had managed to raise $105 million by Wednesday night, according to AP, by selling 15 million shares for $7 apiece."
Why don't you get off your shoebox for once and quote the whole article  |
I didn't quote the entire article, because I didn't think the line which you quoted was relevant to the point I was making.
Since you raised the issue, pre-IPO investments are substantially riskier than IPO investments, precisely because the company may never go public.
Quoted from the SEC website:
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"Pre-IPO" investing involves buying a stake in a company before the company makes its initial public offering of securities. Many companies and stock promoters entice investors by promising an opportunity to make high returns by investing in a start-up enterprise at the ground floor level ? often a new company that claims to be related to the Internet or e-commerce.
But investing at the pre-IPO stage can involve significant risk for investors. And pre-IPO offerings targeted at the general public ? especially those that are publicized through "spam" e-mails ? are often fraudulent and illegal.
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Also from sec.gov:
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The Company May Never Go Public ? In a growing number of cases, fraudsters have focused on the predicted value and imminence of an alleged IPO to lure?and pressure?investors. But don't be taken in by such false promises. While some IPOs yield double- and even triple-digit returns, many others don't or quickly fall back to levels far below the IPO price. In any event, the fact remains that the company may never go public. And if that's the case, you may never recoup your investment.
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It's entirely possible that those pre-IPO investors may possibly never see a dime back from FFN...
It wouldn't be the first time that scammers have used a pre-IPO to swindle people out of money.
ADG