As the impending IPO for LinkedIn, whose shares will be traded under the ticker symbol LNKD on the New York Stock Exchange beginning tomorrow, May 19, approaches, further signs of bubble-like valuations in the privately traded shares of social media outfits such as Facebook, Zynga, Twitter, and Groupon, accumulate.

An item in today’s Wall Street Journal (wsj.com) details the recent experience of one individual investor, a former Silicon Valley executive, in the private shares of some of the aforementioned companies. The 45-year-old former Silicon Valley executive recently shelled out $500,000 for 25,000 shares of closely held social-gaming company Zynga Inc. and in the past year has purchased approximately $2 million worth of private shares in Facebook, Zynga, and LinkedIn.

In an echo of the era when day traders scrambled in and out of technology stocks during the 1990s, wealthy individual investors are flocking to a new crop of Internet darlings, pushing the values of those companies sky high. This time, though, the hottest stocks are privately held and don’t yet trade on major exchanges such as the New York Stock Exchange or Nasdaq Stock Market. Individual investors generate as much as 20% of the trading of private shares, some brokers estimate.

The LinkedIn IPO should deliver huge profits to investors who scooped up LinkedIn shares before the deal on private-company exchanges such as SharesPost Inc. and SecondMarket Holdings Inc. Other buyers get shares through single-company investment vehicles, which pool investor money to buy and hold shares of specific start-ups, while still others buy shares directly from former employees or advisors of those start-ups.

The booming market faces a possible crackdown by the Securities and Exchange Commission, which is concerned about lack of transparency, thin trading volume and insider-trading risks. However, on the other hand and quite hypocritically, SEC officials also are considering whether to revise stock-offering rules in order to spur more buying and selling of private-company shares. Some closely-held companies have clamped down on the trades by exercising a “right of first refusal” on private-share sales. Even when a deal is reached to sell stock, companies typically can still buy back the shares within 30 days, giving them another form of veto power.

The aforementioned individual, who has been buying private shares through the private company exchanges, says that he thinks “values are getting fair, some would argue insane.”