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by weezer 5068 days ago
It's relevant that they can sell their shares after they leave, but if they continue working at FB they have to wait a few more weeks to months for the lock-up period to expire. Maybe they're scared about the stock and want to prevent further losses.
2 comments
rowborg 5068 days ago
Just curious, why do you say this? Most lockups are structured in such a way that they are binding whether or not you continue to be employed by the company. Your shares can only be sold via the company stock plan manager (often the underwriter) and they will enforce the agreement.

Is there any reason you believe FB's lockup is structured differently?

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nerd-on-bay 5068 days ago
First: I know nothing about facebook lockups.

There is a intersecting web of securities law and the terms of the original share sales to private investors.

Here is some information about registration rights and investment term sheets:

http://www.avvo.com/legal-guides/ugc/venture-capital-term-sh...

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nerd-on-bay 5068 days ago
Many corporate employment agreements have two stock sale requirements of note:

1. You can only trade during certain "windows" per quarter. The rest are all blacked-out dates - for example leading up to earnings announcements.

2. Under some employment contracts, you may not benefit from any trading strategy that is contingent on the stock falling in value. In other words, you cannot short nor directly hedge against the stock of your own company.

Specifically what this means is that an executive couldn't short, buy puts, buy a cashless collar, or any direct hedging strategy unless they leave the company.

Leaving the company has its own issues:

1. You may leave large unvested options and/or RSUs on the table. This is very hard and nearly impossible for most people to stomach. Golden handcuffs.

2. If you do leave, you are still not free and clear to do as you please with your stock. If your stock is unregistered, you must ask the company and its investor team, legal team, transfer agent, and often the SEC for authorization to deposit the stock into a trading account.

Finally, for any significant equity position, there are significant tax consequences to each strategy. Read about people being underwater on taxes after exercising ISOs during the dotcom bubble.

tl;dr Seek professional advice.

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