Carta Exits Secondary Trading Business Amid Data Misuse Controversy

Carta Exits Secondary Trading Business Amid Data Misuse Controversy

The fallout from a data misuse controversy prompts Carta to prioritize trust and exit its secondary trading business.

In a surprising turn of events, Carta, a prominent startup specializing in cap table management software, has announced its decision to exit the secondary trading business. The move comes after a Finnish CEO publicly accused Carta of misusing confidential information to sell shares without the knowledge or consent of the companies involved. Carta’s co-founder and CEO, Henry Ward, acknowledged the breach and expressed a commitment to prioritizing trust. This article explores the implications of Carta’s exit from the secondary trading business and the challenges it faces in rebuilding its reputation.

The Evolution of Carta: From Cap Table Management to a Private Stock Market

Carta, a 14-year-old company, initially focused on providing cap table management software. Over time, it expanded its services to become a “private stock market for companies.” The goal was to leverage its platform’s network of companies and investors to establish itself as the primary transfer agent, brokerage, and clearinghouse for all private stock transactions worldwide. While this expansion increased Carta’s value in the eyes of its venture backers, it also exposed the company to potential risks.

The Data Misuse Controversy and Its Impact on Carta

The controversy surrounding Carta’s data misuse began when Karri Saarinen, CEO of Linear, a project management software company and Carta customer, accused Carta of using his company’s investor base information to sell shares without their knowledge or consent. Saarinen’s public accusation prompted other founders to come forward with similar experiences. Carta’s CEO, Henry Ward, publicly apologized, attributing the incident to a rogue employee who violated internal procedures. However, the damage to Carta’s reputation had already been done.

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Prioritizing Trust and Exiting the Secondary Trading Business

In a Medium post, Henry Ward announced Carta’s decision to exit the secondary trading business. Ward acknowledged that even though Carta may not be misusing the data it possesses, the mere perception of such misuse erodes trust within the private company ecosystem. Ward emphasized that the revenue generated from secondary trading was minuscule compared to Carta’s other business offerings, which include cap table management, fund administration, and private equity services. The move to exit secondary trading was seen as a necessary step to restore trust and prevent further damage to Carta’s reputation.

The Challenges of Rebuilding Trust and Ensuring Data Privacy

Ward’s post also highlighted the challenges Carta faces in rebuilding trust and addressing concerns about data privacy. While Carta possesses valuable customer data, it cannot use it without jeopardizing trust. Ward acknowledged that Carta might not be the company that can solve the liquidity problem in the private company ecosystem, despite its access to cap table data. The decision to exit the secondary trading business reflects Carta’s commitment to putting its customers’ data privacy and trust above all else.


Carta’s decision to exit the secondary trading business comes in the wake of a data misuse controversy that shook the trust of its customers. By prioritizing trust and acknowledging the limitations of its access to valuable data, Carta aims to rebuild its reputation and reassure its customers of its commitment to data privacy. The impact of this decision on Carta’s valuation remains uncertain, but the company’s swift response indicates a willingness to address the concerns raised by founders and investors. As Carta navigates this challenging period, it serves as a reminder of the importance of trust and ethical data practices in the rapidly evolving landscape of private company transactions.

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