2019: Another Cycle of IPOs?

December 7, 2018

With so much money constantly flying around Silicon Valley, it’s no surprise that venture capitalists and stock IPOs can often be the source of fraud. We never realized how simple it could be until reading a recent Bloomberg story, “Paying for Popularity Can Be Fraud.”

According to the story, anyone with a little seed money can pay someone to buy up imaginary product, so that it looks like a startup is turning record profits. Even more frightening, it can be done out of thin air:

“[Y]ou can now build valuable products—iPhone apps, crypto currencies, newsletters, etc.—at zero marginal cost, which makes this fraud much easier and more efficient to pull off: You can just give your buddy the money to buy your product and then sell it to him for that money, shuffling money in circles without having to spend any to build more products.”

Here’s an ironic idea: What if some enterprising soul turned technology against some of the more highly anticipated IPOs? Or will enforcement authorities pull off a “look in the rear view mirror” approach in the new year?

Patrick Roland, December 7, 2018


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