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Jack Dorsey Learning The Hard Way That Larry Summers Has No Quiet Period

L-Summs ain't never been about keeping it to himself.

Lawrence Henry Summers has been Chief Economist at The World Bank, President of Harvard University and Secretary of The United States Treasury Department, so getting him on the board of your tech startup sounds like a pretty sweet deal

Right, job hoarder Jack Dorsey?

See, Jack has Larry on the board of his payments startup Square. That looks kind of dope on the letterhead, but it's less real world awesome when you remember that Square is knee-deep in that whole SEC-enforced pre-IPO "quiet period" and that Larry is an incorrigible blabbermouth.

Those two realities apparently banged into each other at a conference in NYC yesterday, where 'Larry did Larry' and an intrepid young BI reporter heard the whole thing.

Here's how the SEC defines the "quiet period" on its own website:

The federal securities laws do not define the term "quiet period," which is also referred to as the "waiting period." However, a quiet period extends from the time a company files a registration statement with the SEC until SEC staff declare the registration statement "effective." During that period, the federal securities laws limit what information a company and related parties can release to the public. The failure to comply with these restrictions generally is referred to as “gun-jumping.”

Basically, the SEC wants everyone connected to an IPO to just "Neflix n' chill" until that baby starts trading, especially if the company and the person connected to it are high profile.

Now here's what Larry said to a room of well-connected investors:

“Square — a company where I’m on the board of directors — basically handles small businesses’ payments," Summers said Tuesday.
"And that puts it in a position to have much better information and much a better cash flow stream, so that it is able to lend in ways that someone who didn’t have that relationship would not be able to lend."

Granted, Larry's hardly offering any detailed financials, but he was on the record in a room full of people that can create the kind of market movement that the SEC is specifically trying to prevent with the whole "quiet period" rule.

And Dorsey can't really afford to have any public loose ends in the court of public opinion right now.

The fact that this is even-maybe-kind of a thing flies in the face of the whole narrative that Jack can simultaneously save Twitter while IPO-ing Square because the board at Square is efficacious and smart, unlike the clown orgy of dysfunction that reigns over at Twitter.

In fact, BuzzFeed made this point just yesterday:

It’s especially striking to compare Twitter’s board with that of the other company Dorsey helms, Square. Square’s board is filled with, well, grown-ups, who aren’t prone to leaking or letting internecine squabbles spill out into the press.

With board members like David Viniar, Silicon Valley superwoman Mary Meeker and Magic Johnson (ferreal), Sqaure does have a pretty impressive cast of adults to help Jack multitask, but if Dorsey is looking for quiet discretion from Square board members right now, he might want to pay closer attention to the guy who once said that girls aren't great at math while he was president of Harvard.

Larry Summers may have just violated Square’s pre-IPO quiet period [BI]


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