I've seen this idea going around for the past six months and I was curious about the feasibility/need for it. Currently there are barriers for companies to reach IPO (Sarbox, etc.) which in turn makes it much more difficult for a clean exit for early-stage investors.
So what has been suggested is to create a secondary market (see here: http://www.avc.com/a_vc/2008/08/a-secondary-mar.html) to help fill the widening gap between startup and IPO. This would in turn create some liquidity that would lead to less risk for founders and early investors.
Clearly there are some legal risks in actually creating a market. The only people that could participate would be accredited investors, and there would be some muddling with the SEC and possibly the CTFC.
I'm asking YC because the discussion doesn't seem to hit this demographic. What do you think?