A good example would be 409A valuations[1], which set the price at which options can be granted. Sale of employee stock on a secondary market can dramatically r

A good example would be 409A valuations[1], which set the price at which options can be granted. Sale of employee stock on a secondary market can dramatically raise the price at which the company has to grant future options, making it harder to hire, and hurting future employees. While this might be ok in open markets with real competition, it's possible (and in fact common) for common stock in trending companies to be overvalued on secondary markets. [1] http://en.wikipedia.org/wiki/Internal_Revenue_Code_section_409A http://en.wikipedia.org/wiki/Internal_Revenue_Code_section_4...