Finra Focuses On Educational Communication With Investors In New Compensation Proposal

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Brokerdealer.com blog update profiles a new proposal from Finra that has educating investors as their main focus. This proposal is a revised version of the one Finra filed last spring with the SEC. In the previous filing, brokers would have required brokers to disclose to investors recruiting incentives above $100,000 they received for switching to a new firm. This new proposal requires firms to send “educational communication” to investors when a broker moves to that firm. This educational communication proposal is drawing a lot of backlash as critics believe it watered down the original idea for compensation disclosures. This brokerdealer.com blog update is courtesy of InvestmentNews’ Mark Schoeff Jr.  and his article, “Finra releases revised broker compensation proposal“.

Finra released a revised proposal Wednesday for a rule designed to help investors understand the financial incentives their brokers had for switching to a new firm.

Under the rule, brokerages would have to send an “educational communication” to investors working with a broker who is moving to their firm. The document customers receive would outline questions they should ask their broker about the compensation and other inducements the broker is getting to transfer to the new firm.

The questions would help investors determine whether the broker’s financial incentives create a conflict of interest and whether investors would incur costs by following the broker to a new firm.

The broker-compensation proposal is a revised version of one the Financial Industry Regulatory Authority Inc. filed with the Securities and Exchange Commission in March 2014 but later withdrew amid industry resistance.

To continue reading about this investor educational communication focused Finra proposal, click here.

Broker Dealers Prepare For Freaky Fast Delivery IPO Courtesy Of Jimmy John’s

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Jimmy John’s is a franchised sandwich restaurant chain, specializing in “freaky fast” delivery and is based out of Champaign, Illinois. Jimmy John’s is currently owned by Jimmy John Liautaud and Weston presidio. Brokerdealer.com blog update profiles as this sandwich restuarant chain reportedly gears up to launch an IPO. The chain has been around since 1983 but has only recently grew in popularity, currently there are more than 2,000 locations in 43 states. This Brokerdealer.com blog update is courtesy of Reuters’ article, “Exclusive: Gourmet sandwich chain Jimmy John’s prepares IPO – sources“, with an excerpt below. 

To contact a brokerdealer to help you get in on this freaky fast IPO, click here.

Jimmy John’s Franchise LLC is preparing for an initial public offering that could value the popular U.S. gourmet sandwich chain at more than $2 billion, including debt, according to people familiar with the matter.

Jimmy John’s, which is owned by founder Jimmy John Liautaud as well as private equity firm Weston Presidio, is interviewing investment banks to serve as underwriters for an IPO that could come later this year, three people said.

Jimmy John’s has annual earnings before interest, tax, depreciation and amortization of roughly $150 million, the people added.

The sources asked not to be identified because the deliberations are confidential. Representatives of Jimmy John’s and Weston Presidio did not respond to requests for comment.

To continue reading about Jimmy John’s likely IPO happening later this year, click here.

International Fraud Lands New York BrokerDealer In Hot Water

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Brokerdealer.com blog update profiles New York broker dealer, Robert Depalo, being charge with several charges after a year long investigation discoverd Depalo was running a highly sophisticated international fraud scheme. Depalo schemed more than 20 wealthy London investors with the help of 37 year old associate, Joshua Gladtke. Both are being charged by the Manhattan DA as well as the SEC. This update is courtesy of the Wall Street Journal’s article, “Manhattan DA Charges NY Broker-Dealer in International Fraud“, with an excerpt below. The Manhattan district attorney’s office charged New York broker-dealer Robert Depalo with running a sophisticated investment fraud, following a yearslong investigation that the office nearly dropped after hitting a dead-end. Prosecutors alleged in court documents that Mr. Depalo duped more than 20 high-net-worth investors in London into pouring $6.5 million into a fraudulent investment vehicle called Pangaea Trading Partners LLC. The Securities and Exchange Commission filed similar civil charges Wednesday afternoon. The alleged scheme involves a complicated trail of money and sham entities that not only befuddled investors but prosecutors as well, the people said. It also highlights the efforts of the district attorney’s office to pursue increasingly complex and international cases that are more frequently handled by city prosecutors’ federal counterparts blocks away at the Manhattan U.S. attorney’s office.

To continue reading about the international fraud scheme, Depalo’s charges, click here

69 Red Flags Raised Before Action Was Taken Against Ponzi Scheme Involved Broker

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Brokerdealer.com blog update profiles broker, Jerry A. Cicolani Jr, who just recently was barred from the broker industry. Normally this wouldn’t be unusual, except it took 69 complaints filed against Cicolani before the Finra, or the FBI, finally did something about it. Not only had Cicolani received 69 complaints in his record, but he also was involved in a Ponzi Scheme as well. This brokerdealer.com blog update is courtesy of The New York Times’ Susan Antilla and her article, “Many Years of Overlooked Red Flags Catch Up to Stockbroker“. An excerpt from the article is below.

There are many brokerdealers who are Finra, SEC, and FBI compliant, to find one of those click here. 

In most professions, it would take only one or two acts of egregious conduct before troubled employees were shown the door. In the case of one stockbroker who has repeatedly had complaints from investors, it took 69 customer disputes filed over the last 13 years before he was barred from the business.

The stockbroker, Jerry A. Cicolani Jr., had complaint after complaint documented in his formal record. Regulators and employers spotted red flags. Yet the organization primarily responsible for monitoring the nation’s 637,000 brokers, the Financial Industry Regulatory Authority, did not bar Mr. Cicolani until September 2014.

The Securities and Exchange Commission had already sued him, in May 2014, over his role in a Ponzi scheme. His most recent employer, PrimeSolutions Securities, based in Cleveland, fired him a day after that lawsuit was filed. And his customers had lodged complaints as far back as 2002.

To continue reading about the legal implications Mr. Cicolani is now facing, click here

5 IPOs To Launch This Week, Raising Close To $1 Billion

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5 IPOs set to launch this week

Brokerdealer.com blog update profiles the 5 IPOs that are suppose to launch this week. With 2 IPOs being tech IPOs, the total for this week’s launches could be close to $1 billion. This update is courtesy of Renaissance Capital with excerpts below, highlighting each of the IPOs.

To get in on the IPO action yourself, find a brokerdealer to work with you and your needs. 

Black Knight Financial Services (BKFS) is the leading provider of automated solutions for mortgage servicing and originations. Spun out of Fidelity National Finance (NYSE: FNF), Black Knight’s platform is used by the top 25 US mortgage servicers and 23 of the 25 largest US mortgage originators. The company’s dominant market position only encourages more customers to use its platform to mitigate mortgage risk.

Shopify (SHOP) is this week’s high-growth IPO. Backed by Bessemer, First Mark and Insight Venture Partners, the company has more than doubled revenue in each of the last 2 years, and sales rose 109% in the 1Q15. The SaaS provider targets 10 million small and medium businesses trying to manage online stores. 

Baozun (BZUN) is the leading provider of brand e-commerce solutions in China with a 20% market share. Backed by Alibaba (BABA), Goldman Sachs and others, it operates in the $4 billion outsourced Chinese e-commerce solutions industry, which is expected to grow at about a 55% CAGR through 2017. It has attracted blue-chip customers like Nike and Microsoft while rapidly growing transaction volumes on its platform. However, investors should be conscious of Baozun’s relatively high customer concentration current lack of positive free cash flow.

Press Ganey (PGND) operates in the nearly-$4 billion market for improving patient satisfaction at health care organizations. LBO’d by Vestar Capital Partners in 2008 for a reported $675 million, the company benefits from incentives under the Affordable Care Act that drive health care to become more consumer-focused. Press Ganey has established itself as the market leader in surveying patients, but also pitches its ability to leverage patient data into an analytics platform that recommends hospital best practices.

Community Healthcare Trust (CHCT) is a newly-formed REIT targeting an initial portfolio of 35 health care-focused properties, including non-urban clinics and surgery centers. Aside from its relatively high initial yield of 7.5%, investors may be betting that CEO Timothy Wallace will leverage his public company experience as former co-founder and EVP of Healthcare Realty Trust (NYSE: HR).

To read Renaissance Capital’s complete coverage on this week’s IPO, click here