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The dismissal of a senior Facebook employee in connection with the purchase of Facebook shares on a private resale trading platform last year raised new concerns about secondary trading in the securities of private companies and insider trading. This practitioner-oriented essay explores these issues and suggests that startup companies consider adopting a variation on the standard insider trading policy widely adopted by public companies. The discussion is important in light of new attention being paid by regulators to insider trading as well as a debate in Congress about barriers to raising capital for smaller companies.

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