• Tech Crunch, Friday, April 1, 2011 12:20 PM

Michael Brown, a Facebook corporate development manager who recently left the company, reportedly purchased Facebook stock on secondary markets -- "which Facebook considers insider trading and grounds for immediate termination," TechCrunch reports.

Some sources says the trade was related to knowledge of the Goldman Sachs investment that valued the company at $50 billion, while others said the trade was made well before the Goldman deal, and "it was just a naive mistake," according to TechCrunch. Either way, the revelation could have far reaching consequences "by bringing even more SEC scrutiny onto rampant secondary trading in non-public start-ups like Facebook and Twitter," TechCrunch writes. Simply put, secondary markets have allows these start-ups to grow rapidly without having to subject themselves to greater oversight and financial scrutiny.

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