DD Support Board and Research Team

[1manband]

Like much of what is on the NASDAQ site, they don't explain it well, do they?

I believe they are referring to companies selling enough shares privately that they are eventually required to register with the SEC under Section 12 of the '34 Act. The regulation was increased in 2012 and now requires registration when the Company's assets exceed $10 million and they have either 2,000 shareholders or 500 non-accredited shareholders. It doesn't come up often, especially since NASDAQ now has its own Private Market to allow private companies (mostly tech companies) to more easily buy and sell stock without being registered. Generally, that has meant employees monetizing their stock options and grants by selling shares to private investment funds.

https://www.nasdaqprivatemarket.com/

NASDAQ lobbied for the rule changes to be able to open the market and seize upon the juicy fees. Many argued that such changes and private markets just made the rich richer, as it severely restricted the incentive to IPO and allow "the masses" to buy stock on the way up. Companies can achieve some level of liquidity while remaining private (but with the drawback of not having the broader market to more accurately value the stock, which can significantly work against the sellers).

IIRC, Facebook originally exceeded the mandatory registration thresholds and was required by the SEC to register since they were issuing private stock to so many employees.