> part of that risk (from the pov of the broker and the buyer) could be hedged contractually everything I can think of here (e.g. not actually paying the selle

> part of that risk (from the pov of the broker and the buyer) could be hedged contractually everything I can think of here (e.g. not actually paying the seller anything until their shares vest) ends up leaving the seller (the employee with the stock options) with strong incentives to not get fired at a place where doing the minimum required work really ought to get you fired. So I guess that could reduce an employee's incentive to work hard by reducing the upside, but it certainly wouldn't eliminate it. And all those things also reduce the investors upside, too; I mean, sure, you've covered the downside, but I get fired and you don't get any of that facebook stock you wanted. Do the deal with two unvested employees, and maybe you end up with more facebook exposure than you can afford. > it seems to me that the staff involved must be paying a hefty risk premium for their liquidity. yeah, especially if the shares are unvested.