Investors Bet Billions As BrokerDealers Get Smart With Xiaomi

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Brokerdealer.com blog update courtesy of The Wall Street Journal

xiaomi-9Chinese smartphone maker has raised more than $1 billion in its latest round of funding, making it one the fastest growing tech start-up of the year. In the latest round of funding BrokerDealers
are have been an essential part in the company raising so much funds as The Wall Street Journal’s Juro Osawa explains below.

Xiaomi Corp. is raising more than $1 billion in its latest round of funding, valuing the fast-growing Chinese smartphone maker at more than $45 billion and making the company one of the most valuable technology startups in the world, a person familiar with the matter said.

The round, which could close as early as Monday, is led by All-Stars Investment, a tech investment fund run by former Morgan Stanley analyst Richard Ji, the person said. Other participants in the round include Russian investment firm DST Global and Singapore sovereign-wealth fund GIC, which are both already shareholders of Xiaomi.

Yunfeng Capital, a private-equity firm affiliated with Alibaba Group Holding Ltd. Executive Chairman Jack Ma , is also participating in the round, the source said. The person declined to say how many shares will be sold in the latest round.

A Xiaomi spokesman declined to comment.

The $45 billion-plus valuation puts Xiaomi above most other Silicon Valley and Asian technology startups. Earlier this month, U.S. ride-sharing service Uber Technologies Inc. said a new round of funding valued it at $41 billion.

The surge in Xiaomi’s valuation over the past year indicates just how high expectations are as the company expands its business outside China, mainly in emerging markets where there is robust demand for inexpensive smartphones.

In its previous round of funding in August 2013, Xiaomi was valued at $10 billion.

Xiaomi, founded by Lei Jun in 2010, has grown rapidly to become the top-selling smartphone vendor in China by offering affordable phones with features rivaling high-end models. Xiaomi phones come with a customized version of Google Inc. ’s Android operating system, and the company often updates the software based on requests from users.

For the entire Wall Street Journal article, click here

BrokerDealers Gear Up For More Merger-Arb Deals

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BrokerDealer.com blog update courtesy of FINAlternatives and originally published by Bloomberg LP

FinAlternatives LogoWith the economy fully recovered from the financial crisis, Brokerdealers, involved in merger-arbitrage funds, are taking higher risks that are giving a much higher reward.

Merger-arbitrage traders didn’t have enough risk last year. This year, they got more than their share — and it’s not going away.

Companies announced $2.8 trillion of acquisitions, making 2014 the busiest year since before the financial crisis. Unprecedented amounts of money were spent in some industries, such as pharmaceuticals, and the transactions skewed larger than at any other time this century, according to data compiled by Bloomberg. The slew of deals gave merger-arbitrage traders plenty to wager on, after last year’s scarcity of profit opportunities.

The explosion of megamergers brought volatility back to the investing strategy. The deals have been fraught with challenges, from regulatory scrutiny to the plummeting price of oil and the government’s attempt to deter tax inversions. Betting on them didn’t always pay off. More than $100 billion of potential takeovers unexpectedly blew up, like when drugmaker AbbVie Inc. called off its $55 billion purchase of Shire Plc. That burned merger-arbitrage funds, some of which will end the year at a loss even as stocks around the world surge.

“Drought conditions turned into basically flood conditions this year,” Louis Meyer, a New York-based event-driven analyst for Oscar Gruss & Son Inc., said in a phone interview. “Volatility is good, but it can be a double-edged sword. The positive aspect is you do have deals and the trend seems to be continuing. On the other hand, you’ve had real risk emerge and portfolio managers can no longer work on cruise control.”

For the original article from FinAlternative, click here.

 

Ex-Sterne Agee CEO Didn’t Know His Corporate Card Wasn’t Meant To Be Used On Boats, Trucks, Condos, Yachts, Etc

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Brokerdealer.com Blog update courtesy of Dealbreaker.com and Birmingham Business Journal

For some brokerdealers, like James Holbrook, it is hard to play by the rules, luckily, there are many who do follow the rules.

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Ex CEO James Holbrook

Sterne Agee Group Inc., one of the fastest-growing brokerages in the South, sued its former chief executive officer over claims he took his corporate credit card on a decade-long spending spree for fishing boats, a yacht, a vacation condominium and ownership in a luxury ski chalet. The complaint against James S. Holbrook Jr., ousted as CEO in May, follows revelations that he’s being investigated by the U.S. Justice Department over the claims… “Holbrook wasted SAG’s corporate assets and used them for his own personal benefit,” the Birmingham, Alabama-based brokerage said in the complaint. His conduct “was beyond how a reasonable person might act in his position,” according to the filing…

Holbrook, starting in 2003, used corporate assets to buy two fishing boats and a Chevrolet Suburban through an entity he formed called Birmingham Broward LLC, according to the complaint. Over the next few years, the executive used company resources in a similar manner to invest in the ski chalet in Deer Valley, Utah, and acquire an interest in Five Star Plantation LLC, a hunting club in Kellyton, Alabama, according to the complaint. The most recent purchase described in the complaint was in March, when Holbrook allegedly diverted company resources to buy a 68-foot (21-meter) luxury fishing yacht.

Holbrook’s lawyer continues to argue, “There is nothing newsworthy about this lawsuit. It simply rehashes the same baseless allegations that have been pending against Sterne Agee and Mr. Holbrook for almost two years and chronicled ad nauseum. In my opinion, Sterne Agee’s time and money would be better spent focused on its clients, employees and shareholders rather than on an attempt to intimidate Mr. Holbrook with these stale allegations. This filing demonstrates that anyone with a typewriter and a law degree can file a suit.”

FINRA makes it clear for Brokerdealers, Their Rules Aren’t Toys

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Brokerdealer.com Blog update courtesy of Investment News.

FINRA, Financial Industry Regulatory Authority, fined 10 banks on Thursday for total of $43.5 million for promising positive analyst coverage after initial public offering.

Citigroup Inc. and Goldman Sachs Group Inc. were among 10 banks fined for failing to shield analysts from pressure to promote stocks a decade after a U.S. crackdown sought to end Wall Street conflicts of interest.

MW-BX587_toys_r_MG_20140326121052The investment banks promised favorable research to Toys “R” Us Inc.
and its private-equity owners in 2010 to win roles in its initial public offering, the Financial Industry Regulatory Authority said Thursday in a statement. The regulator fined the firms a total of $43.5 million, faulting them for “implicitly or explicitly” making promises that their analysts would give positive coverage. Six of the 10 firms didn’t have adequate supervisory procedures to prevent the practice.

Citigroup, Goldman Sachs, Credit Suisse Group AG, Barclays Plc and JPMorgan Chase & Co. were fined $5 million each. Deutsche Bank AG, Bank of America Corp., Morgan Stanley and Wells Fargo & Co. will pay $4 million. Needham & Co. will pay $2.5 million. The firms didn’t admit or deny wrongdoing, according to FINRA.
“The firms’ rush to assure the issuer and its sponsors that research was in sync with the pitch being made by their investment bankers caused them to overstep the prohibitions against analyst solicitation and the promise of favorable research,” Brad Bennett, FINRA’s chief of enforcement, said in the statement.

FINRA said Thursday that Toys “R” Us and its owners demanded that analysts and bankers agree on valuation. For example, the owners told Barclays that they were interviewing analysts “after having been burned” on other deals in which they learned too late about analysts’ negative sentiments, according to FINRA.

Brokerdealer.com offers many databases full of brokerdealers who choose to abide by the rules of FINRA and you can find them here.

For the entire article from Investment News, click here.

 

BrokerDealers Crow About Crowdfunding

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CrowdfundingBrokerdealer.com blog update courtesy of extract from the New York Times.

For most start-up businesses, money to finance the business is a key issue, in recent years, start-up businesses have been turning to crowdfunding.

Crowdfunding is raising money contributions from a large number of people, typically through the use of the Internet. Some of the  more popular crowdfunding sites include GoFundMe and Kickstarter.

These kind of small businesses are the ones President Obama wanted to help in 2012 when he signed the Jumpstart Our Business Startups Act, better known as the JOBS Act. Part of the law, Title III, was intended to allow small businesses seeking capital to crowdfund, or raise money from virtually anyone, by selling stock and other securities over the Internet. “Start-ups and small business will now have access to a big, new pool of potential investors,” Mr. Obama said at the time. “For the first time, ordinary Americans will be able to go online and invest in entrepreneurs that they believe in.”

crowd-fundingCongress directed the Securities and Exchange Commission to finalize the rules by December 2012, but the agency has yet to do so. As it reviews Title III of the JOBS Act, a debate has raged. Supporters say crowdfunding is an innovative way to finance new ideas. Others say the high risk associated with backing early-stage businesses is inappropriate for ordinary investors.

Only accredited investors — those with annual income of more than $200,000 or $1 million in net worth not including their primary residence — are permitted to participate in crowdfunding deals. Under the proposed rules, which the S.E.C. introduced in October 2013, businesses could raise up to $1 million in a 12-month period without registering the offering with the agency.

“The goal is to democratize and improve finance,” said Representative Patrick T. McHenry, Republican of North Carolina, who worked on the House crowdfunding bill that was incorporated into the JOBS Act.

In writing its rules, the S.E.C. adopted strict requirements intended to minimize fraud and protect investors. Individuals who are not accredited investors, for instance, would face limits on how much they could invest. Businesses would be required to go through a registered broker or a new type of registered platform called a funding portal for their offerings. Businesses also would be required to submit audited financial statements. The rules are still under review and may change.

While the rules are still under review having a brokerdealer in your corner to help find smart investments to make whether it is in a small company or large corporation.

For the full story from the New York Times click here