NASDAQ OFFERS NO REGULATION MARKET FOR THE SUPER RICH

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DAVID CHO, WASH POST - NASDAQ [is launching] what its executives are
calling one of the most significant developments on Wall Street in
decades -- a private stock market for super-wealthy investors.

Any private firm can list on NASDAQ's new platform, which is called the
Portal Market, and raise money by selling stock to an elite group of
shareholders. These companies would remain private and not have to make
public their financial statements or submit to federal regulation, such
as the Sarbanes-Oxley corporate accountability law.

Once a tiny influence on the markets, private money has gained
unprecedented power on Wall Street. This year, the biggest deals have
been swung not by public companies, but by private-equity firms that are
spending hundreds of billions of dollars to buy household names, such as
Hilton Hotels, Sallie Mae and Chrysler, and turn them into private
companies.

For the first time last year, corporate America raised more money --
$162 billion -- from private investors than from initial public
offerings, which raised $154 billion from the three major U.S. stock
markets . . .

The boom in private money has become so important to the financial
system that major investment banks, including Goldman Sachs, Merrill
Lynch, Lehman Brothers and Citigroup are setting up rival private stock
markets of their own. But none will be as large as Portal, which will
list the shares of about 500 firms on its first day of trading.

Ordinary investors can only participate indirectly if their mutual fund
creates an account to trade on the private markets. . .

Portal is the first centralized private stock market for an elite class
of investors called Qualified Institutional Buyers, or "QIBs," that was
created in 1990 by securities rule 144A. This law defined QIBs as
investing institutions with at least $100 million in assets. It also
allowed private companies to raise money by selling shares only to QIBs
and remain exempt from regulatory scrutiny. These firms, however,
disclose their financial statements to their investors.

http://www.washingtonpost.com/wp-dyn/content/article/
2007/08/13/AR2007081301170.html


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