SEC chair blasts Silicon Valley for its hokey valuations

Re: Here here

The price is set by wealthy investors, you aren't even allowed to put money into the funds unless you are a multi-millionaire.

Perhaps the SEC could have done a better job protecting the pensions and savings of ordinary people who put their trust in safe reliable companies like GM.

Re: Here here

It seems like every 10 to 12 years there is a tech IPO bubble as people "invest" in the latest fad. To be fair, many of the companies involved are not scams but have a real business idea/product to sell. Whether the public likes the idea/product is the key and many companies will fail. The problem is the hype surrounding the fad makes too many not do "due diligence" and assess whether the business has a viable business plan.

Also, some of the IPO valuations smell of a form penny stock pump-and-dump tactics. The companies are not worth 1bn but more like 1 to 10 million.

Re: Here here

Finally, someone with authority that thinks these companies aren't worth nearly what people say.

Count me unimpressed. Mrs Rip Van Winkel may have just woken up and noticed, but there's companies (like Yahoo) that will eventually disappear after more than two decades without ever paying a dividend, and yet they sit on astronomical valuations with no substance. For the lucky ones who have or will sell out and make a profit, there's many more buying into Yahoo in what has to be a straightforward Ponzi scheme.

In addition to not justifying their valuations, Ms White needs to look at all companies who seem to think that the secondary equity market is just a source of free capital that doesn't have to be paid for. Amazon, Googlebet, Ebay, and many others hold this belief, where the shareholders only return is selling to the next mug for a higher price. These same companies are often sitting on mountains of cash, often held offshore, and its often these same people undertaking extreme tax avoidance measures everywhere they operate.

About time the SEC got tough on these companies, but I shan't be holding my breath.

Re: Overvalued?

Smart VC's are front running the pump and dump factory, launching ships like some demented multi-tasking Helen of Troy.

Re: Applaud the letter! Unfortunately its toothless as Unicorns & Bankers are in bed together...

Bankers do not go to prison in the USA

Re: An intelligent articulate regulator addressing the specific issues.

Not really - the SEC is worried that if the current racket continues then its bosses (Goldman Sachs etc) might end up not making as much money as they did from mortgages. Of course they won't actually lose money, that privilege is reserved for the general public.

Re: Sure, jump on the tech stocks

No way somebody as respectable as Mr. Madoff would be up to something dodgy. Besides we have had several junior regulators who will go work for Wall St. in a few months look into it, so nothing to see here. Fsck the SEC. Whenever the spotlight gets hot on them for their ineptness they go fiind some low hanging Indian American analyst to charge with insider trading to show they are getting tough on their white collar buddies.

Whaaaaat?

AG: "Murder is illegal."

SoloSK71: "but saving lives is totally legal, even though it is the exact opposite of this"