That kind of scam is exactly why securities trading is regulated. Before the IPO though, all bets are off and unless you're the VC writing the term sheet, you're the sucker.
It doesn't have to be a scam. The pie got bigger, but perhaps because other people added more stuffing (money) to it. So one's original piece remained mostly the same.
The point is that with public securities, the SEC makes sure that it's not a scam. A public company can't just decide one day to issue a ton of stock and hand it over to an arbitrary entity, there's a regulatory process and legislated veto power held by the shareholders/board.
When you buy an unregulated security (like shares in a "crowdfunded" startup), that's the protection you're not getting. Most people in this community tend to see the SEC as the enemy, but this is the value it provides.
Hmm, where I live at least (not US) the company still have to act in a way that's in the interest of its owners. They can't do shady stuff just because they're not publicly traded. Or, they can, but it's not any more legal.
