Restructuring Advisement Firm, Houlihan Lokey, Sets Sites On $200m IPO

Posted on March 27, 2015 by admin

Brokerdealer.com blog update profiles the restructuing firm, Houlihan Lokey Inc., who is usually helping other companies have succuessful mergers and acquistions, is planning its own step to more success by preparing to launch an intial public offering that could raise at least $200 million. This Brokerdealer.com blog update is courtesy of the Wall Street Journal article, “Houlihan Lokey Lays Groundwork for IPO“, an excerpt from the article is below.

Houlihan Lokey Inc., known for advising companies on midsize mergers and acquisitions and big bankruptcies, is gearing up for a deal of its own.

The firm is planning for an initial public offering of stock this year, according to people familiar with the matter, which would make it the latest independent investment bank to cash in on increasing client and investor demand. A Houlihan IPO could raise more than $200 million, the people said. Based on valuations of similar firms, Houlihan could be worth more than $1.5 billion.

The firm, founded in 1972, has been investigating a possible IPO since last year, and recently decided to move forward with one, the people said. Houlihan is discussing the plan with banks interested in arranging the deal, including Goldman Sachs Group Inc. and Bank of America Corp., though any share sale isn’t expected until the second half of the year, the people added.

To read the entire article on the Wall Street Journal’s website, click here.

Finra Focus On High-Frequency Trading; HFTs Might Need BrokerDealer License

Posted on March 26, 2015 by admin

BrokerDealer.com blog update profiles the latest shoe to drop as both the US Securities & Exchange Commission (SEC) and Finra contemplate regulatory changes that could require firms engaged in high-frequency trading aka HFT to become registered brokerdealers. Below is excerpt of coverage from FT.com

US regulators have moved to close a loophole that allows some high-frequency trading firms that trade equities away from regulated exchanges to operate with light supervision.

The Securities and Exchange Commission on Wednesday proposed requiring proprietary traders to become members of the Financial Industry Regulatory Authority, a markets regulator.

The change would give authorities greater oversight for the day-to-day operations and recordkeeping for many high-speed traders and electronic market makers who dominate much of trading on US equity markets.

“Today’s proposed rules would close a regulatory gap by extending oversight to a significant portion of off-exchange trading,” said SEC chair Mary Jo White.

It is the first move by the US regulator to tighten monitoring of high-speed electronic traders, which aim to profit from rapid-fire moves in the market, following intense scrutiny on the industry a year ago. Flash Boys, a book by author Michael Lewis, alleged that high-frequency traders were among the beneficiaries to a market structure that was “rigged”. That led to calls for greater oversight of HFTs and off-exchange trading which had been building as equity trading increasingly moved to venues outside the traditional exchanges.

The SEC’s proposal would amend a rule that exempts certain brokers and dealers from membership in a national securities association. The existing rule reflected practices more than two decades ago, when equity markets were dominated by floor-based exchanges which could more easily regulate all of their members’ trading activity.

That world has largely disappeared as the emergence of high-speed technology and alternative trading venueshas helped usher in a new breed of proprietary traders that dominate trading. Although some have registered as broker-dealers at Finra, such as RGM Securities, Quantlab Securities and Tradebot Systems, there are also many that have not.

To read the entire story from FT, click here

Farmville Company Faces IPO Fraud

Posted on March 26, 2015March 26, 2015 by admin

Brokerdealer.com blog update profiles online gaming company, Zynga, most popularly known for the Facebook game, Farmville, is facing a lawusit for IPO fraud. Zynga apparently defrauded its shareholders about its prospects before and after its December 2011 initial public offering. Brokerdealer’s blog update on this IPO fraud is courtesy of Reuters’ Jonathan Stempel’s article, “Zynga must face lawsuit alleging fraud tied to IPO” with an extract below.

Ruling 13 months after dismissing an earlier version of the lawsuit, U.S. District Judge Jeffrey White in San Francisco on Wednesday said shareholders could pursue claims that Zynga concealed declining user activity, masked how changes in a Facebook Inc platform for its games would affect demand, and inflated its 2012 revenue forecast.

The lawsuit was based in part on at least a half-dozen confidential witnesses, and White said their testimony supported the claim that Zynga management intended to commit fraud.

“Plaintiff alleges that the officers at Zynga obsessively tracked bookings and game-operating metrics on an ongoing, real-time basis, with regular updates on the activity and purchases by every user of every Zynga game,” White wrote. “Confidential witnesses all corroborate that the updates on game users and spending data was readily accessible to Zynga’s management.”

White rejected a claim over Zynga’s alleged product launch delays, saying it was mere “business puffery” for the company to call its game pipeline “strong,” “robust” and “very healthy.”

To read the entire article from Reuters, click here.

Ex-New Jersey Broker Dealer Has A Good Time On His Clients’ Dollars

Posted on March 24, 2015March 24, 2015 by admin

Brokerdealer.com blog update profiles ex-New Jersey broker dealer, Evan Kochav, who stole more than $500,000 from clients and using it spend on poker at casinos and football tickets. This brokerdealer.com blog update is courtesy of NJ.com’s reporter, Christopher Baxter “Ex-N.J. stock broker indicted for stealing $562K from clients for poker, football tickets“. An excerpt from NJ.com is shown below.

A Jersey City man has been indicted for stealing $561,745 from clients of his investment firm and spending the money on personal expenses including poker at casinos and football tickets, state authorities said today.

From 2012 to 2014, Evan Kochav, 33, allegedly stole money from 10 investors he had solicited through his Red Bank-based firm, White Cedar Group, which he marketed as an economic consulting firm that had links to investment and business groups worldwide.

But authorities said the business was a front for Kochav, a professional poker player, to divert money to himself in order to pay for his gambling at casinos in New Jersey, Pennsylvania and Florida and on at least two poker websites.

He also allegedly transferred money to his wife and paid for shopping, dining, air travel, hotels, football tickets and other entertainment. A small sum was paid to his investors in order to cover up the scam, authorities said.

“Kochav bluffed investors like the poker player he is, claiming ties with lucrative business ventures around the globe to convince clients their hard-earned money was securely invested,” acting state Attorney General John Hoffman said.

The indictment, handed up by a state grand jury Monday, charged Kochav with theft by deception, money laundering, misconduct by a corporate official and writing bad checks for more than $85,000 to a client who had questioned what happened to his money.

For the entire article from NJ.com, click here.

Banned BrokerDealer, Cacchione, Backs Into Industry via RIA —Gets Busted Again

Posted on March 23, 2015 by admin

Brokerdealer.com blog update profiles David Scott Cacchione’s , a former managing director of Investment Brokerage Firm who was sentenced to 5 years in prison in 2009 for his role in defrauding lenders into more than $100 million in loans, new failed attempt to get back into the brokerdealer game. This update is courtesy of a 20 March InvesmentNews article “SEC shuts down ex-broker’s attempt to start RIA from jail” with an extract from the article below.

Convicted felon David Scott Cacchione, who was barred from the brokerage industry in 2009 for helping orchestrate a $100 million fraud scheme, has been barred again by the Securities and Exchange Commission after he tried, while still incarcerated, to re-enter the securities industry through a registered investment adviser.

Mr. Cacchione, 50, attempted, as others barred from the brokerage industry have, to play on the dual licensing of brokers and investment advisers to resurrect a career in the securities industry.

Mr. Cacchione pleaded guilty in 2009 to securities fraud for pledging the securities of unknowing clients to secure more than $45 million in personal loans for a friend. The scheme eventually resulted in almost $47 million in losses, according to the FBI. He also engaged in unauthorized trading in the accounts of clients, including a local children’s charity and an elderly widow, according to the SEC.

Mr. Cacchione was sentenced to 60 months in jail followed by three years of supervised release and ordered to pay nearly $50 million in restitution. According to the SEC, he had paid only $502 of that as of last August.

For the entire article from InvestmentNews, click here.