[ghufran_syed]

You realize that when forming a company, the number of shares you issue is arbitrary, right? If three founders each put in $1 capital, and each get 1 share, then the price per share is $1. If instead the founders get 1 million shares each, then each share is worth 1 millionth of a dollar. What economic difference does it make?

Or are you claiming that on the day that he paid $0.001 per share, someone else paid more per share? If that didn't happen, there is NO WAY to determine after the fact what the “true” market value was on that date.

[Scoundreller]

> Or are you claiming that on the day that he paid $0.001 per share, someone else paid more per share

I suspect this was the case. Hypothetical example: Class A shares were available for $100 each, and Class B shares for $0.0001 each, but you could only get a B share by buying an A share. With the implicit (or explicit?) promise to merge the share classes together eventually to cause the prices to converge and massively inflate the Roth IRA side of the investment where you stashed the B shares.

So the $0.0001 shares all cost you $100 each to buy, but that $100 comes from outside your $2000 contribution limit.

[vmception]

You don’t need two classes of shares for this you are over complicating things

[Scoundreller]

Yeah, could just do the share issuance in 2 stages: the first at $0.000001 then later at >$1 to raise useful capital.

But multiple share classes often exist anyway for various reasons (different preferences upon liquidation, different voting polices, different retraction policies, different dividend policies, etc)

[vmception]

Yes

I believe Bain Capital used separate share classes to pump their employees 401ks

That level of collaboration and financial engineering should be encouraged

[maxerickson]

The article says that Paypal filings with the SEC stated that the purchase was below fair value.

The fun thing about your second paragraph is that courts don't care whether it is true.