Poll: Ban Questionable Practice of VCs Trading on Secondary Exchanges?

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Lest you believed that sleazy behavior was confined to Wall Street, we point you to questionable activities of some of the residents of Sand Hill Road. My colleague Jonathan Marino today wrote about how some venture capitalists are buying and selling shares of private companies on secondary exchanges – and how quite a few firms don’t have policies forbidding these transactions.

This truly is a black eye for the venture industry, which has been trying to regain credibility after a decade of under-performance. The message being sent by the VCs engaged in this behavior is, “Well, I’m not going to make any carry on my fund, so I may as well see if I can make a quick buck on SharesPost.” I’m sure the LPs paying fees on those funds are thrilled to hear that.

When I created the attached survey, I considered coming up with a different question because I figured just about everyone would answer “yes” to: Should VC firms ban their partners from purchasing shares on secondary exchanges?

I’m amazed that 15% have actually said “no.” Did you say “no” because you don’t think it’s a problem? Or are you one of the VCs who now trades on secondary markets and want to keep doing it, no matter the potential conflict of interest it creates?

What’s your take on this, peHUB readers?