Private Company Shares Can Now Trade


Dr. Kiran Garimella

Chief Scientist & CTO


Dr. Kiran Garimella

Chief Scientist & CTO

Kiran Garimella, Ph.D., is the chief scientist and chief technology officer at KoreConX, leading the strategy and development of blockchain and machine learning solutions. A sought after speaker and author, Kiran has more than 25 years experience in information technology, consulting and financial services. Previously, Kiran held roles such as global CIO and chief architect at a General Electric company and vice president and chief evangelist for BPM at Software AG. He is also an advisor to the Alliance of Merger & Acquisition Advisors and the MidMarket Alliance, principal founder of iKnowCentral and co-founder of

Lee Saba

Head of Market Structure

Rialto Markets

Lee Saba

Head of Market Structure

Lee Saba brings more than 20 years of experience in the financial services industry. Prior to joining Rialto as Head of Market Structure, Lee was Managing Director and Principal at Wellington Management where he was responsible for proprietary and third party multi-asset electronic trading and connectivity infrastructure. For over 17 years, Lee led and contributed to industry standards on a variety of concepts including FIX post-trade for equities, futures and FX, execution venue normalization, risk mitigation symbology and electronic trading risk controls. While at Wellington, Lee headed the inaugural IT FinTech Working Group and was a vocal advocate of the investor hub for blockchain and digital assets research. Lee currently serves as the co-chair for the FIX Trading Community ( consisting of 290+ members worldwide and is also an active steering committee member for Northeastern University’s D’Amore-McKim School of Business FinTech Initiative.

Andrew Corn


E5A Integrated Marketing

Andrew Corn


Andrew Corn is the CEO of E5A Integrated Marketing, a systematic, data-driven investor acquisition-focused agency that assists firms with raising assets or capital, engaging in outreach to prospective shareholders or clients, and launching new products. His experience spans several industries, including advertising, marketing, software development and investing. Previously, Andy was the CIO for E5A Funds LLC, a firm specializing in alternative investments and after-tax alpha strategies. He also served as CIO for equities at Beacon Trust Company, CEO of Clear Asset Management, and SVP for Corporate Marketing for Prior to that he was EVP Digital for Citigate which purchased his software firm MasterApproach and was the CEO/Head of Strategy for the agency Admaster Communications.

Andrew Corn 00:00

Hi okay, we’re live.


Dr. Kiran Garimella 00:30

All right. Welcome to the session, gentlemen, Andrew Corn and Lee Saba, thank you so much for being here. And I know some of you had the earlier sessions. And we really appreciate this one. So I’m just going to start with my introduction, and then I’ll kind of turn it over to you, Andrew and Lee. So I’m Kiran Garimella. I’m the Chief Scientist and CTO for KoreConX. And I’ve been in the financial services industry for many, many years, with the large companies as a global CIO for General Electric and other companies self such ilk, and also have experienced as a personal trader myself in various types of markets in the space. And obviously, the entire private capital markets is a very, very exciting space to be in. So, you know, everyone offers in this entire ecosystem or partners, all of us, right, we are on a mission to educate everyone about, you know, how to be really successful in this type of environment. With that, I’m going to turn it over, Andrew, if you will introduce yourself briefly. 


Andrew Corn 01:38

Sure. Thank you, Andrew Corn, and anyone who was at the last session, I was there, the founder and chief strategist at E5A Integrated Marketing. We are a systematic data-driven investor acquisition firm. We work all across investor acquisition, meaning we work in real estate, we work for exchange-traded funds, hedge funds, venture funds, private equity, and of course, doing private raises and Reg D and Reg A plus.


Lee Saba 02:17

Thanks, Hey, Lee Saba I’m the head of market structure for Rialto Markets. We’re a broker-dealer in the United States. We help companies form capital within the Reg A CF and D constructs. We’re registered in all 50 states, we also run a secondary trading platform, which is an alternative trading system or you’ll hear this called an ATS, which allows us to match buyers and sellers of these private securities. A quick background on on me, I’ve been in the financial services markets for over 20 years, the last 18 years prior to Rialto I spent at Wellington management, which is an asset management firm. It is located in the Boston area, and I also co-chair the fixed trading community, which is a an industry standards organization that focuses on the trade communication standards that allow us to do such trading.


Dr. Kiran Garimella 03:25

Awesome, thank Thanks, Lee. And Thanks, Andrew. So I just want to give an open question, and you know, kind of get a sense from both of you, in this whole, you know, Reg A space, and to be really successful in this one, and specifically from a med-tech ecosystem perspective. There’s this whole notion of there’s an initial capital raise investment happening. And then of course, what happens after that, right, we made an investment, I’m an investor in Reg A, I update this stuff. And then what happens, right, so, Lee, I’m going to point you first and see, you know, to what extent this is a perception of the secondary markets, in these types of environments, right capital markets, and what is the sense of maturity and eagerness for people to participate in something like this?


Lee Saba 04:19

Sure, yeah. No, thanks, Kiran. You know, it’s a great question. I think, you know, the JOBS Act was huge, right, in this in this space, it allowed for the first time, you know, retail and accredited and institutional investors to actually participate in these, you know, early-stage growth companies. And, you know, it’s, it’s still astonishes me, you know, and hopefully people haven’t heard me talk about this before, but, you know, prior to 2012, it would be illegal to own you know, early stage companies, you know, like, like a Tesla or, you know, you know, Amazon or something of that effect here. So it’s something that’s a household name. Now, before they went public, it was illegal. No. So, you know, it’s, it’s, it hasn’t been that long. So now, with the Jobs Act, it allows participants to actually, you know, get invested in those companies. And, you know, there’s a lot more opportunities, there’s, you know, I hear a lot of different numbers. I don’t know if you guys can back us up to, but somewhere between 28 and 32 million private companies in the United States alone, and I’m not sure, you know, let’s just call it 30 million to be simple. Now, you know, investors would have access to, to a number of them in the primary market, big deal, that’s a huge deal. You know, you can invest, you can put those things into your IRAs now and your retirement savings, or you can just put them in your general portfolio. That’s all well and good. The problem, one of the problems with that, though, was that there was no way to get in or out of those securities. So, you know, if you wanted to realize some gains, if you wanted to, if you had to sell for a particular reason, or you wanted to buy more, or get into it at all, because you missed it in the primary, there was no mechanism to allow for that. So, hence, comes the secondary market infrastructure. So, you know, at Rialto we have what they call an alternative trading system, again, which allows that secondary trading where you can put an order on whether to buy or sell, and, you know. Hopefully, you know, you find the other side, within reasonable, you know, price constraints. So that’s, you know, we got a one-two punch, I think, as far as magic goes, one, you know, you can invest in these, you know, awesome early stage, you’re potentially awesome, not all of them will be awesome, but a lot of them, you know, hopefully, will be and then, and then you can trade-in and out of those securities, you know, later on, and each one of the constructs in the private realm, you know, whether it’s A or CF or D, have different regulations around them, how soon you can trade them, but you can trade them going forward.


Dr. Kiran Garimella 07:13

Yeah. Awesome. Andrew. So if I turn this to the other side for a second, and from an investor perspective, so you know, you’re very much tuned into, you know, how investors think and the behavior. And I know you do a lot of wonderful analytics on them. How do you see investors perceiving this whole value proposition of secondary trading? Is that something they consider hugely attractive when there’s an issuer? And there is the facility for secondary trading? How does it play into this equation?


Andrew Corn 07:47

Yes. So it’s something that always comes up. Once they’re really thinking about it. Remember, we’ve got millions of people investing for the first, second or third time in a private company. It’s not something they’ve been doing forever, although some people have been doing it most of their careers. But a lot of people are new to this. So we have some fixed income, Reg A plus we’re working on where basically you invest, it’s like buying a bond, and you’re getting yield, even those people will want to know is the redemption policy. And in almost every offering circular, you know, the issuer’s right to take care of redemption, especially in an emergency situation. But what if it’s something paying 10%, and you need to get out, but someone else wants to get out. So bam an ATS is a way of you’re putting it out there, and the issuer doesn’t have to redeem. What if it’s a long-term hold. We’ve had some VC type holding companies that we’ve worked for. And generally, you know, you think of the VC fund, it’s a five return to your hold. So one of the things investors want to know is is, you know, are there 1000 people waiting to make that trade? They don’t need to know that what they want to know is that they don’t have to go to some specialized brokerage that’s then going to have a team make phone calls and charge them, you know, more than their stock is worth to facilitate that trade. So we do work with, of course, your firm and also with the release firm. And what’s so great about that is that on almost every deal that we’re working on, there is the ability for them to put it on a secondary marketplace. It is a supply and demand market at that point, but even if you find your own buyer privately, it is so great to have a marketplace in which to facilitate that. 


Dr. Kiran Garimella 09:49

What do you feel, and I’m going to turn to Andy, and then Lee, you know you can chime in as well. How if you if you’re looking at issuers and kind of help I’m going to succeed throughout this process? How much of an emphasis would you put on their ability to understand the secondary market secondary trading as a value proposition for their company for their offering?


Andrew Corn 10:16

So I would answer that, that most issuers don’t want to see their shares trading all over the place the way you would a public company. But I think it’s very comforting for them to know that there, if there are people who didn’t get in, or you hit certain milestones, it’s a way of them figuring out valuation. So if they sold at $10, a share, they’ve hit another milestone and so on, wants to buy at $30 a share, that gives them an idea if they want to do another offering. So there’s a lot of ancillary information that comes their way by putting their shares on the ATS, or making sure that investors can buy sell hold the and as I said, you know, our job in the marketing world is creating a lot of fear of missing out. And anyway, you know, so when people didn’t get in, if they can buy shares from anyone who has buyer’s remorse in those first 30 days, that’s a really nice thing, also, compliance wheeling on everything. 


Lee Saba 11:29

Ya know, I’d like to add a little bit to that, too, you know, if this comes up a lot, and, you know. I think the attitudes are evolving quite rapidly, you know, we’ve talked to, we’ve talked, and we’ve, we’ve spoken to, you know, several firms who say, you know, we wish that we’re staying private, you know, we’re not, we don’t, we don’t have plans to go public anytime soon, or ever. We’ve been private now for eight or ten years, you know, we thought we might go public to, you know, in our first two or three years, and we granted, you know, employee stock. Now, you know, those employees have been with us for, you know, some extended period of time. And, you know, they’ve had life-changing events, they wanted to buy a house, they have children, college, whatever. Now, they want to realize something, right, so they have paper value, in, you know, equity in the company, but there’s no way to really realize that through an ATS mechanism, you know, that that is possible. So, those have been very interesting conversations, as a, it’s almost like an employee benefit, you know, for their folks that have, you know, through in been there, especially if the company is doing quite well, you know, there are folks that actually want to, you know, from the outside that wants to get, you know, some taste of that. I think, you know, the other opportunity here is around, you know, you can have a real-time order book. So you can see a real-time price at any given moment. But it’s also a factor of the amount of investors that you actually have already on the cap table, again, working with, you know, KoreConX, and, you know, making sure that all that ticks and ties, but if you have, you know, what I’m gonna say the F word, Kiran, which is short for fluidity, you know, we can’t guarantee, you know, any sort of liquidity, but we can guarantee some fluidity, that, you know, we can streamline the process back to what Andrew was saying, you know. Where, you know, it’s, you don’t have to pick up the phone call some specialized broker, they make 50 calls, they charge you an arm and a leg, you know, you can put your order into the ecosystem. You know, the ATS, we can easily transact, and after the hours and hours and hours, Kiran and I have spent on the phone, and you know, nights, you know, making sure this process is work, you know, validate that, that the, you know, the orders are good and safe and get updated on the cap table, and everything’s lined up. So, there are a lot of different opportunities here. The other piece where we’ve seen, does have some, some traction is around an auction or a point in time cross. So if you’re, you know, if you have 500 investors, or you have, you know, 100,000 investors, obviously, your liquidity profile is probably going to be a little bit different. So, what would, what we’re capable of doing here is creating a time you know, let’s call it June 7, you know, at noon time, Eastern, you know, please, you know, put in your orders, and we’re going to cross between noon and 1215. So, we can aggregate orders all the way up until that moment, and, you know, get all the flow at one time, as opposed to a real-time limit order book where orders are wrestling there and you’re waiting for a fish to kind of, you know, swim by, hopefully, you know, with their hook in the water, we can get all the fish in the same pond at the same time. And then they’ll do what they do.


Dr. Kiran Garimella 15:13

No, absolutely. So will there be a huge behavioral change and expectations because you know, when people are going to secondary markets or ask about secondary markets. Because most people have come from and have experience with the public markets, I mean, the way they behave, that expectation for liquidity for order fulfillment, and so on, or program trading, and so on. I mean, people have a perception of that isn’t going to drastically change how we’re seeing the groundswell of a whole segment of the population, which are becoming bigger than the private, you know, the public markets, where they have a different level of connection and different style of, you know, secondary market activity.


Andrew Corn 15:54

Yeah, so let’s start with the New York Stock Exchange the largest secondary market out there, and then the NASDAQ. So although the OTC may beg to differ and say they’re actually larger than both, but there are shares on the New York Stock Exchange, which will have zero volume today. That’s because there are no active buyers, and they’re not active sellers. So it is a supply-demand market, it will always be there are a lot of logistics and technology that go into making for smooth markets, their market makers, there’s the floor brokers, you know, the specialists, as they’re called, a lot of that has disappeared with the whole electronic trading. And firms like Rialto who have done an incredible job with getting this technology together. And marrying it with a TA. But it is a supply and demand market. And if there are no buyers and their sellers, the price could drop, or there could just be crickets, there can be no one’s just interested. So, you know, for people to sell shares, there have to be buyers, for people to buy shares, on the other side of that, there have to be sellers. So if you have a hot issue, and it’s doing really well, people want to get in, you know, this is we live in a capitalist society, if it came out at $10, maybe it needs to sell at 100. Because someone’s just dying to get in, in which case that will motivate sellers. I mean, how much do we know? Why do we know how much Apple computers worth right now? You can go to the NASDAQ and get a price because that’s what people are willing to pay. It’s just a very large market for that particular issuer.


Dr. Kiran Garimella 17:42

That’s right. That’s right. So I know we’re running a little bit out of time. And, you know, we know we have one on one conversations with us here, and we can go on for hours on this stuff. It’s pretty exciting, actually. What I would like to do is, you know, maybe if you can summarize again, I apologize for the interest of time. But if you can summarize, you know, the key takeaways that you feel that issuers and investors need to know. And to be prepared, especially the issuers need to be prepared for, you know, Reg A and what would be good for them to know, as one or two or three really key takeaways in terms of the value of the secondary market facility. Lee, do you want to go first?


Lee Saba 18:29

Sure, yeah, I think, you know, understand that the constructs, where are you where you’re raising your capital, you know, is it a reg D? Is it a Reg A? Is it reg CF? And ask yourself the question, you know, do I want to, you know, perform secondary trading or allow secondary trading, once the seasoning periods are, are met for each one. And just, you know, as a, you know, quick sidebar, you know, Reg CF, you know, what, once that once the raise is done, it’s a year maturation process, 12 months, you know, Reg A is, is, you know, as soon as the, as soon as the raise is complete, and, you know. Again, I’m using kind of general terms, but and then reg D is for, you know, accredited investors only. There is a 12-month hold period on that, for most instances, you know, there was always some, some odd exceptions, but, you know, just understand what your which one, you know, facilitates, you know, the, what you’re trying to accomplish as an entity and, you know. Just understand, understand the jobs act a little bit and what’s underneath it, and, you know, we’re here to serve, we’ve got we do have the ecosystem available across, you know, KoreConX and reality to, to facilitate both primary and secondary fluidly.


Dr. Kiran Garimella 19:52

Awesome. You have to get in the F word.


Andrew Corn 19:56

Thank you. Excellent. Yeah, had heard the F word before, but I like it. So, you know, to issuers, I say don’t ignore the ATS and say it’s something we’ll do after we close. You need that facility before you close. And if you do the math quickly, if you’re raising $20 million, your average investors putting in 2200, bam, you have a boatload of shareholders. If you don’t want phone calls saying, you know, something’s happened, and I really want to sell my shares, let them put it on the ATS. And then also, as you’re doing investor communications, that ATS might start to light up. So you know, it is something that definitely helps in marketing to have that in place. And it’s also a very practical tool.


Dr. Kiran Garimella 20:48

Awesome. Andrew Corn with E5A Integrated Marketing and Lee Saba, head of market structure Rialto Markets. Gentlemen, it’s always been a pleasure talking to you guys. You guys have so many insights that you bring from your wide experience both in investor analytics and, in you know, capital markets. Really appreciate it. Thank you so much for being here with us.


Lee Saba 21:10

Thank you, Kiran. Good to see you.


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