Facebook, Twitter and peers for sale - privately

NEW YORK (AP) -- Scott Painter makes his living betting on startup companies, having played a role in launching 29 of them over the years. But with the bad economy choking initial public offerings and acquisitions, Painter is now backing an idea that makes it easier for insiders like him to sell shares in their companies even before they go public.

SharesPost, which was founded by Painter's business partner, Greg Brogger, launched publicly in June. Through SharesPost's Web site, Painter is trying to sell shares in several companies he helped found, including car pricing startup TrueCar.com. He also wants to buy shares in companies that are far from an IPO, like short-messaging site Twitter and business-networking site LinkedIn.

SharesPost is one of a few private stock exchanges that are emerging to fight what venture capitalists call a liquidity crisis. These exchanges give stakeholders an alternative way to trade their shares in hot startups like Facebook for cold, hard cash - without having to wait years for an IPO.

Employees at startup employees often put in long hours but get salaries that can be 20 percent less than their peers at public companies. In return, they get stock or options that they hope will be a path to sports cars and summer homes after their company goes public or is bought out.

Given this, services like SharesPost could help startup workers get some cash while awaiting a distant IPO that might never even get off the ground. Most people won't be in on the action, though, since these exchanges are only open to a small pool of buyers.

And it's not clear how much - or how little - stock has changed hands through them. In its short life, Santa Monica, Calif.-based SharesPost said it has executed one $25,000 transaction, while another service, New York-based SecondMarket, said it has completed about 40 transactions in the past year worth about $150 million.

Still, if they manage to thrive, these exchanges could help the economy. By selling shares on a private exchange, an investor can free up funds to put into other startups. And institutional investors could use these services to broaden their holdings to include fast-growing companies that have yet to go public.

The methods of these private exchanges vary. SharesPost uses an online bulletin board to introduce buyers and sellers. SecondMarket links the parties and lets companies set up their own mini-markets that they control, while Redwood City, Calif.-based XChange is rolling out an online system that will allow buyers and sellers to connect and directly trade shares for cash.

All are open just to institutional investors - organizations like venture capital firms or pension funds that manage at least $100 million in assets - and individual accredited investors. That category includes people with a net worth of at least $1 million, or salary of at least $200,000 for the last two years.

The concept is not entirely new. Nyppex, formed in 1998, facilitates private-company stock trades, and a few companies with similar offerings emerged during the last economic downturn but failed to gather much steam. Among the problems: Determining a fair price for a private company's stock is tough without much public information.

This time, however, employees and investors are more aggressively looking for a way to get a return on their dedication and funding. More than a dozen companies have priced IPOs in the U.S. this year, down from 35 in the first half of 2008, according to research firm Renaissance Capital. In the same period of dot-com-crazy 2000, there were 219 IPOs in the U.S.

Besides the economy, startup investors say the high costs and regulatory requirements associated with going public have also stymied many smaller, younger companies. According to the National Venture Capital Association, the median span from a company's founding to its IPO was 9.6 years in 2008. In 1998 it was 4.5 years.

One factor is compliance with the Sarbanes-Oxley anti-fraud law, which was enacted in 2002 after accounting scandals at companies like Enron Corp. and WorldCom Inc. A key part of this law requires public companies to file reports on the strength of internal financial controls and fix any problems - steps that can be costly for a startup.

Issues like this have "just made it more and more difficult for companies to make it to that next step," said Thomas Foley, chief executive of XChange, which he developed with venture capitalist Tim Draper.

SharesPost founder Greg Brogger believes his site has one solution to the slowdown in IPOs: Bulletin boards for more than 100 startups that allow buyers and sellers to post the price and number of shares they want to purchase or unload, and the ability to e-mail one another directly.

Parties wishing to make a deal can find the relevant contracts on the site to sign, and an escrow company completes the transaction, charging both sides $2,500. So far, a $25,000 deal - the site's minimum transaction size - has been completed for 2,500 shares of electric car startup Tesla Motors at $10 apiece.

That reflects a great deal of optimism for a company that has only sold roughly 500 cars and had to get additional funding from the U.S. Energy Department. A report from one of SharesPost's research providers, NeXt Up Research, valued Tesla at $1 billion, or $9 per share. The car company had no comment.

Anyone can sign up for free to see startups listed on SharesPost. Only qualified investors can buy shares, and SharesPost makes money by charging buyers and sellers $34 a month.

XChange, meanwhile, enables buyers and sellers to share confidential information necessary for making informed purchases, and it has a platform for users to trade shares. When it is fully launched later this year, XChange will be an automated online exchange, much like E-Trade, where users can instantly trade shares for cash.

But while these services may be able to speed up dealmaking, users must still grapple with another key issue: how to determine a fair price for stock in a company that isn't required to regularly disclose its financial information and doesn't have that many potential buyers or sellers.

At SharesPost, Brogger wants to solve the problem by offering as much information as possible about companies it lists, from analysts at Next Up Research and VC Experts. SecondMarket CEO and founder Barry Silbert said companies can decide to share some details with investors and potential bidders on his site.

SharesPost doesn't believe the research on its site will cause any problems should the company file for an IPO with the Securities and Exchange Commission, as these types of analyses are published by investment banks during the IPO process.

Still, the lack of public disclosure and limited number of traders on these services makes Kathy Smith bristle. A market with limited transparency, participation and disclosures "is not a solution to the markets we have now," said Smith, a principal at Greenwich, Conn.-based Renaissance Capital.

And trading is not always as simple as posting a sales opportunity and an asking price. Startups often restrict what their employees can do with their shares and stock options - commonly imposing the "right of first refusal." That generally means employees who find buyers for their shares have to let the company decide if it wants to buy the stock back instead, for the same price. Companies can use this stipulation to keep competitors from snagging a stake.

Even if these services help startup employees and investors, they're not likely to eliminate the need to someday go public.

For one thing, this kind of market can only get so big. Private companies with more than $10 million in assets are required to file annual reports with the SEC if they have more than 500 shareholders of record. This rule prodded Google Inc. into filing for its IPO in 2004, and it could happen to others as these exchanges distribute shares among more shareholders.

Several of the private exchanges say it's up to companies to keep track of their total shareholder count. Foley said XChange helps companies keep tabs by revealing who their shareholders are at any given time.

Another reason IPOs won't vanish: Companies usually go public first to raise cash for their operations, and then to set a price that will eventually let insiders turn their holdings into cash. While some of the private exchanges do let startups themselves - and not just their employees and investors - sell stock, it's not likely to be lucrative without a large base of potential buyers.

Still, some buyers, sellers and startups may see trading through these services as the way to go until the IPO market improves.

"At the very least, it's going to be spring training for companies before they go public," SecondMarket's Silbert said.

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Companies appeal to China to drop Web filter plan

BEIJING (AP) -- Global business groups have made an unusual direct appeal to Chinese Premier Wen Jiabao to scrap an order for PC makers to supply controversial Internet filtering software, citing security and privacy concerns.

Just days before the deadline to comply with China's order, the letter from 22 chambers of commerce and trade groups representing the world's major technology suppliers adds to pressure on Beijing to halt the plan following an official protest by Washington.

The order requires manufacturers to pre-install or supply "Green Dam Youth Escort" software with PCs made for sale in China beginning Wednesday.

"The Green Dam mandate raises significant questions of security, privacy, system reliability, the free flow of information and user choice," said the letter dated Friday, a copy of which was provided to The Associated Press. It appealed to Wen to "reconsider implementing the Green Dam requirements."

Such a direct appeal to Chinese leaders is highly unusual. Companies usually avoid commenting publicly on government policy for fear of retaliation.

The letter was signed by leaders of the American, European and Japanese chambers of commerce in China, the U.S. National Association of Manufacturers and trade groups representing the world's major technology suppliers.

The filtering plan "seems to run counter to China's important goal of becoming a vibrant and dynamic information-based society," the letter said.

Chinese authorities say the "Green Dam" system is needed to block access to violent and obscene material. But analysts who have reviewed the program say it also contains code to filter out material the government considers politically objectionable.

The system also has been criticized by free-speech advocates and some of China's 298 million Internet users.

PC makers received the order in May, giving them little time to test the software and work out how to comply. Manufacturers say they still are trying to obtain details of the plan.

A spokeswoman for China's Ministry of Commerce said she had not heard about the letter and declined to comment. A spokeswoman for the Ministry of Foreign Affairs said it was not in charge of the issue.

Top U.S. trade officials have called on Beijing to revoke the order requiring the filtering software, calling it a "serious barrier to trade" and citing security concerns. They said Beijing might have violated its World Trade Organization commitments by failing to give companies adequate advance notice and time to comment.

The conflict reflects the clash between the authoritarian government's efforts to control information and China's high-tech ambitions. China has assembled the world's most extensive system of Internet monitoring and filtering, but the new software system would take the controls to a new level, placing monitoring technology inside the individual's computer.

China is important to PC makers such as Dell Inc., Hewlett-Packard Inc., and Taiwan's Acer Inc. both as a major manufacturing site and a fast-growing market. It accounts for up to 80 percent of world production and sales.

The Green Dam plan has raised questions about whether the software, produced by a Chinese company, might cause technical problems, and how customers abroad will react to companies cooperating with Beijing's censorship.

Researchers at the University of Michigan who studied Green Dam say they found "serious security vulnerabilities due to programming errors" that could allow any Web site a user visits to take control of a PC.

A California company, Solid Oak Software of Santa Barbara, says parts of its own filtering software were used in Green Dam, raising questions about possible violations of intellectual property rights.

The Chinese manufacturer of the software has even received death threats. Workers at Jinhui Computer System Engineering Co. have received more than 1,000 harassing phone calls this month, Zhang Chenmin, the general manager of the company, told the official Xinhua News Agency. Zhang was quoted Wednesday as saying one caller had even threatened to kill his wife and child.

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Iran pledges 'crushing' response to US critiques

EDITOR'S NOTE: Iranian authorities have barred journalists for international news organizations from reporting on the streets and ordered them to stay in their offices. This report is based on the accounts of witnesses reached in Iran and official statements carried on Iranian media.

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President Mahmoud Ahmadinejad vowed Saturday to make the U.S. regret its criticism of Iran's postelection crackdown and said the "mask has been removed" from the Obama administration's efforts to improve relations.

Ahmadinejad - with his internal opponents virtually silenced - all but dared Obama to keep calling for an end to repression of demonstrators who claim the hardline leader stole re-election through massive fraud.

"You should know that if you continue the response of the Iranian nation will be strong," Ahmadinejad said in a speech to members of Iran's judiciary, which is directly controlled by the ruling clerics. "The response of the Iranian nation will be crushing. The response will cause remorse."

Ahmadinejad has no authority to direct major policy decisions on his own - a power that rests with the non-elected theocracy. But his comments often reflect the thinking of the ruling establishment.

The cleric-led regime now appears to have quashed a protest movement that brought hundreds of thousands to the streets of Tehran and other cities in the greatest challenge to its authority in 30 years. There have been no significant demonstrations in days, and the most significant signs of dissent are the cries of "God is great!" echoing from the rooftops, a technique dating to the days of protest against the U.S.-backed shah before the 1979 Islamic Revolution.

Days of relatively restrained talk from both Washington and Tehran appear to be returning to a familiar pattern of condemnation and recrimination despite Obama's stated desire to move away from mutual hostility. Iran and the U.S. still appear interested in negotiations over Iran's nuclear program, but the rising rhetorical temperature can be expected to slow progress toward a deal, experts said.

"The political feasibility of pursuing it, and the likelihood of success has changed," said Trita Parsi, president of the National Iranian American Council. "I have a hard time seeing any real engagement taking place for at least four to six months."

Obama acknowledged Friday that Iran's violent suppression of unrest would hinder progress, saying "There is no doubt that any direct dialogue or diplomacy with Iran is going to be affected by the events of the last several weeks."

Obama struck a conciliatory tone toward Iran after taking office, sending a video greeting for Persian New Year that used the government's formal name - the Islamic Republic of Iran - in a signal that the goal of regime change had been set aside. He even avoided strong language as Iran began suppressing street protests, saying he wanted to avoid becoming a foil for Iranian hard-liners who blame the United States and other Western powers for instigating internal dissent.

But Obama decried Iran's crackdown more vigorously as amateur videos of beating and shootings began flooding the Internet. He said Friday in his strongest condemnation yet that violence perpetrated against protesters was "outrageous," and dismissed a demand from Ahmadinejad to repent for earlier criticism.

"I would suggest that Mr. Ahmadinejad think carefully about the obligations he owes to his own people," Obama added.

Iran also had been stopping short of its normally harsh language about the U.S., mostly blaming Britain and even France and Germany as Mousavi's supporters demanded a new election. Ahmadinejad had made relatively few appearances in an apparent attempt to avoid inflaming the situation.

The protests dwindled to scattered clashes as riot police and Basij militiamen put down the unrest using batons, tear gas, water cannons and, in at least 17 cases, live ammunition. Mousavi said Friday that he would seek official permission for any future rallies, effectively ending his role in street protests.

Ahmadinejad appeared self-assured and even invigorated Saturday in the face of the previous day's personal challenge from Obama.

"We are surprised at Mr. Obama," Ahmadinejad said. "Didn't he say that he was after change?

"They keep saying that they want to hold talks with Iran. All right, we have expressed our readiness as well. But is this the correct way?" Ahmadinejad told judiciary officials. "They showed their hand to the people of Iran, before all people of the world. Their mask has been removed."

He still appeared to leave some opening for dialogue, saying Iranians officials "have expressed our readiness" and still want the U.S. to "join the righteous servants of humanity as well."

Experts said, however, that it was not yet certain that Ahmadinejad and his most powerful backer, Supreme Leader Ayatollah Ali Khamenei, would emerge from the unrest as strong as before. Many speculated that the fight between hard-liners and reformists had moved behind the scenes and would add more uncertainty to U.S. dealings with the already opaque regime.

Authorities briefly arrested relatives of Ayatollah Hashemi Rafsanjani in a move seen as a warning to the powerful former president not to work against Ahmadinejad and Khamenei. Other prominent conservatives such as Tehran's mayor and the parliament speaker have criticized the government in recent days in another indication of possible internal divisions.

"This will complicate the decision-making process inside Iran," said Bahman Baktiari, an expert on Iranian factional politics and director of the Middle East Center at the University of Utah. "I think we will see paralysis in the Islamic Republic when it comes to making important decisions."

A 30-year-old resident of the central city of Isfahan told The Associated Press on Saturday that people continue to shout "God is Great!" and other anti-regime slogans from their roofs at night in Tehran and Isfahan.

"People are angry and afraid," he said on condition of anonymity for fear of government reprisal. "They are afraid of the future and angry because they failed to achieve change with their ballots."

Members of the Basij militia have been raiding homes and beating residents in an attempt to stop the chanting, Human Rights Watch said, accusing authorities of seizing satellite dishes to prevent citizens from seeing news broadcast from overseas. Iranian officials have blamed the British Broadcasting Corp., Voice of America and other news channels for fomenting unrest on behalf of Western governments.

"While most of the world's attention is focused on the beatings in the streets of Iran during the day, the Basijis are carrying out brutal raids on people's apartments during the night," said Sarah Leah Whitson, the rights group's Middle East director.

Italy has granted visas to Iranians seeking to flee the violence and wants the European Union to adopt a common policy on how to assist them, the Italian foreign minister said.

Italy and other members of the Group of Eight industrialized nations called Friday for an end to the violence in Iran and urged the authorities to find a peaceful solution.

Iranian Foreign Ministry spokesman Hasan Qashqavi was quoted by the official news agency IRNA as accusing the G-8 of "interventionist and hasty remarks."

In Sweden, Foreign Ministry spokesman Andre Mkandawire said the Swedish ambassador was summoned by Iran's foreign ministry Friday after clashes between demonstrators and Iranian Embassy officials outside Stockholm.

Demonstrators broke into the embassy, climbing through shattered windows and injuring one embassy worker, police said.

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Nato and Russia to mend ties

CORFU, Greece: Nato and Russia yesterday restarted formal co-operation on broad security threats but failed to bridge fierce differences over Georgia in their first high-level talks since the war in the Caucasus region.

The deal emerged after Nato Secretary- General Jaap de Hoop Scheffer said the two sides recognised it was time to crank up joint efforts against Afghan insurgents and drug trafficking, Somali piracy, terrorism and nuclear proliferation.

"We have restarted our relations at a political level, we also agreed to restart the military to military contacts which had been frozen since last August," Scheffer said, referring to the Russia-Georgia war.

"The Nato-Russia Council is now back in gear. We agreed not to let disagreements bring the whole train to a halt. On Georgia, there are still fundamental differences ... (But) Russia needs Nato and Nato needs Russia."

Russian Foreign Minister Sergei Lavrov was decidedly more reserved about the deal struck with Nato counterparts on the Greek island of Corfu after protracted mutual recriminations over Georgia that sank relations to a post-Cold War low.

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King of Pop Michael Jackson is dead (1958 - 2009)

Michael Jackson, the child star turned King of Pop who set the world dancing but whose musical genius was overshadowed by a bizarre lifestyle and sex scandals, died on Thursday. He was 50.

Jackson was pronounced dead at about 2:26 p.m. PDT (2126 GMT) after arriving at a Los Angeles hospital in full cardiac arrest, said Fred Corral of the Los Angeles County Coroner's office. The cause of death was not known and an autopsy would likely take place on Friday, he said.

Jackson's sudden death had been reported earlier by U.S. media, which said he was taken ill at his home and rushed to the hospital by paramedics who found him not breathing when they arrived.

Known as the "King of Pop," for hits that included "Thriller" and "Billie Jean," Jackson's dramatic, one-gloved stage presence and innovative dance moves were imitated by legions of fans around the world.

He transformed music videos and his lifetime record sales tally is believed to be around 750 million, which, added to the 13 Grammy Awards he received, made him one of the most successful entertainers of all time.

But Jackson's belief that "I am Peter Pan in my heart", his preference for the company of children, his friendship with a chimp, his high-pitched voice and numerous plastic surgeries also earned him critics and the nickname "Wacko Jacko."

Jackson, who had lived as a virtual recluse since his acquittal in 2005 on charges of child molestation, had been scheduled to launch a comeback tour from London next month.

Quincy Jones, who helped arrange the music on the album "Thriller" and produced the "Off the Wall" album, told MSNBC: "I am absolutely devastated at this tragic and unexpected news."

"For Michael to be taken away from us so suddenly at such a young age, I just don't have the words. I've lost my little brother today, and part of my soul has gone with him."



SOLD-OUT SHOWS

Jackson had been due to start a series of concerts in London on July 13 running until March 2010. The singer had been rehearsing in the Los Angeles area for the past two months. The shows for the 50 London concerts sold out within minutes of going on sale in March.

"Rarely has the world received a gift with the magnitude of artistry, talent, and vision as Michael Jackson," said Neil Portnow, president and CEO of The Recording Academy in a statement.

"He was a true musical icon whose identifiable voice, innovative dance moves, stunning musical versatility, and sheer star power carried him from childhood to worldwide acclaim."

There were concerns about Jackson's health in recent years but the promoters of the London shows, AEG Live, said in March that Jackson had passed a 4-1/2 hour physical examination with independent doctors.

Outside the hospital in Los Angeles about 200 fans and reporters gathered on Thursday, waiting for confirmation of Jackson's death or condition.

Some fans were crying and hugging each other, and others were climbing atop fences to get a better look at a microphone stand where a news conference was supposed to take place.

"I hope he's gone to God, and I hope that he's free of all the troubles he's been plagued with," Tonya Blazer, 50, who said she had been a fan going back more than four decades to his days as a child star.

"I just feel like I'm paying tribute to him," said Dawn Burgess, 42, a fan who said she had posters of Michael pinned to her bedroom wall when she was a child.



CHILD STAR TO MEGASTAR

Jackson was born on Aug. 29, 1958, in Gary, Indiana, the seventh of nine children. Five Jackson boys -- Jackie, Tito, Jermaine, Marlon and Michael -- first performed together at a talent show when Michael was 6. They walked off with first prize and went on to become a best-selling band, The Jackson Five, and then The Jackson 5.

Jackson made his first solo album in 1972, and released "Thriller" in 1982, which became a smash hit that yielded seven top-10 singles. The album sold 21 million copies in the United States and at least 27 million worldwide.

The next year, he unveiled his signature "moonwalk" dance move while performing "Billie Jean" during an NBC special.

In 1994, Jackson married Elvis Presley's only child, Lisa Marie, but the marriage ended in divorce in 1996. Jackson married Debbie Rowe the same year and had two children, before splitting in 1999. The couple never lived together.

Jackson has three children named Prince Michael I, Paris Michael and Prince Michael II, known for his brief public appearance when his father held him over the railing of a hotel balcony, causing widespread criticism.

New Yorkers and tourists in the city's Times Square were shocked at the news of Jackson's death.

"I don't know what to say. It's sad, it's really, really sad," said Nicole Smith, an 18-year-old student from Brooklyn, New York, in Times Square. "My mother was a fan. I listened to his music."

"I'm shocked. I thought someone was lying to me when I first heard it. I was a fan from when he was a little boy and then he got weird," said Sue Sheider, 51, a teacher from Long Island.

(Additional Reporting by Jill Serjeant in Los Angeles and Michelle Nichols in New York)

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At Least 9 Killed in D.C. Train Collision During Rush Hour

Washington :- At least nine people were killed and scores injured during rush hour Monday evening when two Metro trains collided, causing cars from one to land atop the the other.
The National Transportation Safety Board and the FBI are on the scene of what is being called the deadliest crash in the Metro's history, according to D.C. officials.

Overnight, rescue workers located three more bodies in the wreckage. All three were declared dead at the scene, according to a press release on the District of Columbia Fire Department's Web site.

District of Columbia Fire Department spokesman Alan Etter said crews had to cut people out of the mangled train cars in what he described as a "mass casualty event." Rescue workers propped steel ladders up to the upper train cars to help survivors escape.

According to an update posted on the Metro Web site, there are at least "one hundred injuries, many serious, according to preliminary reports." One of the victims is a female Metro employee operating one of the trains.

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Iranian Police Attack Hundreds of Opposition Protesters

TEHRAN — Riot police attacked hundreds of demonstrators with tear gas and fired live bullets in the air to disperse a rally in central Tehran Monday, carrying out a threat by the country's most powerful security force to crush any further opposition protests over the disputed presidential election.

Britain, accused by Iran of fomenting post-election unrest, said it was evacuating the families of diplomats and other officials based in Iran — the first country to do so as Iran's worst internal conflict since the 1979 Islamic Revolution escalated.

Witnesses said helicopters hovered overhead as about 200 protesters gathered at Haft-e-Tir Square. But hundreds of anti-riot police quickly put an end to the demonstration and prevented any gathering, even small groups, at the scene

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