UBS Employees Become Members Of NYC “Sexual Elite” Networking Club

Posted on March 12, 2015March 12, 2015 by admin

Brokerdealer.com blog update courtesy of DealBreaker’s Bess Levin and for many clients, this story could be a deal breaker. UBS, a Swiss global financial services company with its headquarters in Basel and Zürich, Switzerland, UBS is operating in more than 50 countries with about 60,000 employees around the world, as of 2014. Some of these 60,000 employees have decided to attend a “sex club” in New York City. Below is an extraction from DealBreaker

Have you spent a good deal of time gazing upon your coworkers and thinking, “Working alongside each other is nice. Watching them scarf down Seamless has its perks. Burning the midnight oil to get these pitchbooks done is more fun than you’d think. But what I’d really like to do is attend a sex party with these people. But not just any old sex party put together in a slapdash manner and attended by people who give bondage gear a bad name. I’m talking a highly organized sex party produced by pros who know what they’re doing. Maybe someone with a British accent, who only has a couple degrees of separation from the Queen of England, and can lend an air of class to the event and know how to make a decent cup of Earl Grey. Someone whose roster of clients include the crème de la crème of f*cking. Someone who is not just a sex party planner but a serious businesswoman who did 7-figures in revenue last year by providing “A-list actors, British aristocrats, Formula One owners, moneyed married couples” and banking heirs with a smorgasbord of sexual delicacies”? Then today’s your lucky day.

Leggy models in Christian Louboutin heels and Wolford stockings glide from room to candlelit room. A dapper man in a custom suit eyes them while sipping Champagne by the mansion’s fireplace. A DJ plays in a corner. Oysters are slurped at the bar. And then, in a matter of minutes, pants are off, bras are unhooked and a tangled web of nude revelers go at it on a bed plopped smack in the middle of the 12,000-square-foot home. It’s just another night at Killing Kittens — the roving members-only sex club that professes to be “the world’s network for the sexual elite.” On Saturday night, the kinky London-based club makes its New York debut. For $100 per woman and $250 per couple, the adventurous can spend hours sleeping with strangers in a swanky Flatiron loft rented for the evening. Cocktail attire and masks are required (though, needless to say, both will get shed rather quickly)…

“When [my ex-boyfriend and I] hosted a party at our house [in London], we had a bed and there were these two gorgeous silver foxes and this black girl whose legs went to Tokyo, and she was just demanding everything from them . . . it’s complete carnage,” she says. “It’s like a buffet.” […As of Tuesday, Sayle says 60 people have signed up for the NYC event, including a group of British female bankers who work at UBS’s Midtown office and a bevy of models. “They all have the same mentality,” a raspy-voiced Sayle says of her members.” They’re all overachievers.

For the entire article from DealBreaker, click here.

Push For More Transparency Exposes Broker-Dealer Profit Centers

Posted on March 3, 2015 by admin

Brokerdealer.com blog update is courtesy of Think Advisor. With a push for more transparency in the brokerdealer industry, profit centers are being exposed.

There’s nothing wrong with broker-dealers being profitable, but how those profits are obtained could use a good dose of disclosure. Representatives deserve to know that what they are paying is a true cost and what they are receiving is the best possible commission from a vendor.

First, let’s look at the profit centers that are relatively obvious to reps. In addition to the spreads broker-dealers receive from payout grids, there are two other primary sources of broker-dealer profit: revenue sharing and markup.

REVENUE SHARING BETWEEN BDS AND VENDORS

Revenue sharing happens between the broker-dealer and the product vendors, so it’s of little concern to reps. For example, on mutual funds and variable annuities, broker-dealers will negotiate with vendors to earn basis points (bps) on assets or sales of products their reps sell.

Broker-dealers will typically make 1 to 10 bps on either assets or sales of products, with small firms making only 1 or 2 bps and larger firms making 8 or more. Larger firms also have the ability to make these basis points on both assets and sales as they leverage their scale to obtain more.

On REITs and alternative investments, BDs earn between 1% and 1.5% extra in commissions on those product sales, which is called “marketing reallowance.” You may have noticed the increasingly large REIT and alts presence at BD conferences over the last five years—it’s simply because these vendors are currently willing to spend more to get in front of reps.

MARKUP CHARGES ON CLEARING FIRM COSTS

Markups, such as ticket charges, are something that representatives recognize as a profit center when they look at their various costs and see that firms differ on what they charge for them. It may not be apparent how much the markups are, or how extensively the costs incorporate overall costs, but reps recognize that there is a spread between clearing firms’ costs and what broker-dealers charge the representative.

For example, a clearing firm commonly charges $1 for postage and handling fees, and the broker-dealer charges between $4 and $7. A stock ticket charge from the clearing firm may be $9, but they charge the rep $19. BD scale is a primary factor in how low a firm is able to negotiate with the clearing firm: Small broker-dealers may be able to negotiate perhaps $12 from the clearing firm on stock ticket charges, while a large broker-dealer can negotiate down to $5.

For the rest of the article on ThinkAdvisor, click here.

FOMO Is Leading To Cramming Of Startups According To One Capitalist

Posted on February 23, 2015 by admin

Brokerdealer.com blog update courtesy of the Wall Street Journal.

Venture capitalist and Benchmark partner, Bill Gurley, advised people against “cramming” too much money into startups, such as Uber, Snapchat, and WeWork, at last week’s Goldman Sachs technology conference. Following his speech, Gurley gave even further insight to investing in startups and how the slang word, FOMO, plays into investing.

After speaking about the risks of “cramming” too much money in startups at the Goldman Sachs technology conference last week, venture capitalist Bill Gurley exited the stage.

More than a dozen investors swarmed the lanky partner of Benchmark, eager to speak with him— but few were planning to heed the venture capitalist’s advice. According to Gurley, one man, who represented a large mutual fund, asked, “You don’t want us to invest in this but the big tech stocks are not delivering enough growth and my competitors are getting into these startups, so what are we supposed to do?”

Gurley says he didn’t have a good answer but he wasn’t surprised by the sentiment, which he describes as FOMO, a slang popular among millennials that stands for “fear of missing out.”

It is this infectious FOMO, according to Gurley and other venture capitalists, that has created a flotilla of billion-dollar startups with ever-soaring valuations and mixed financials.

According to The Wall Street Journal’s Billion Dollar Startup Club, there are now at least 73 private technology companies worth more than $1 billion dollars, versus 41 a year ago. Some, such as Uber, the $41.2 billion car hailing app backed by Gurley’s Benchmark, are worth enormous sums. At least 48 companies were valued at $1 billion or more for the first time, and another 23 members moved up the ranking after raising more money.

Many investors are treating these 73 companies as if they were publicly traded, says Gurley. They are investing sums of money usually reserved for IPO offerings and, sometimes, giving away those dollars with the kind of confidence usually associated with investors who’ve perused regulatory filings for detailed financial information. The investors themselves are a blend of traditional venture-capital players and typically public-market investors: hedge funds, mutual funds and banks. They are sort of meeting in the middle, with the venture capitalists investing in later-stage companies than they have historically done, through new growth funds, and the institutional investors getting in before the IPO.

“We’ve been calling this the private-IPO slice,” said David York, managing director of Top Tier Capital Partners, a fund of funds. “The valuation of risk is a public-market thought process versus a private-market thought process.”

Gurley, who has become a vocal critic of irrational behavior in the industry, says he’s also very worried about the pile-up in the “private IPO” market.

He’s worried that venture capitalists’ new bedfellows, such as mutual funds, are too new to venture capital to properly weigh the risks and realize that these billion-dollar companies are not guaranteed home runs.

“This replaces the IPO — but not all these companies are IPO level candidates,” he said. “Would you hand a teenager $200,000?”

According to data collected by The Journal, of the 29 firms that have invested in five or more current billion-dollar startups, only about half are traditional venture-capital firms. The rest are a mix of institutional investors, such as the Dragoneer Investment Group and Tiger Global Management, and strategic investors, such as Intel and Google. Near the top of the list is Tiger with 12 investments in private billion-dollar companies, and T. Rowe Price Group with 11. In this group, Tiger also raised the most money last year, keying up $4 billion, or 12% of all venture capital raised in 2014.

With such financial heavyweights jumping in, many of their peers are wondering: Can I afford to sit out?

It’s difficult to quantify exactly how much money is sloshing around at this level. Several top venture capital firms have raised large growth funds in the past few years, but total contributions from hedge funds, mutual funds and banks is practically immeasurable without knowing how much each invested in particular funding rounds. Whatever the amount, this layer of growth capital could warp prices, venture capitalists say.

“It’s like traffic on the highway, you add just 5% more cars and it slows down traffic considerably,” said Glenn Solomon, a managing partner at GGV Capital. His firm is an investor in four companies in The Billion Dollar Startup Club.

In some ways, Gurley’s firm has benefited from this influx of pre-IPO capital. His firm is an early investor in four companies in the Billion Dollar Startup Club: Uber, Snapchat, WeWork and Jasper Technologies. All four have since raised money from a big public-market investor.

For the entire article from the Wall Street Journal, click here

Opus Bank Expands Into BrokerDealer Services

Posted on February 3, 2015 by admin

Brokerdealer.com blog update is courtesy of a press release from Opus Bank and found on MarketWatch

Opus Bank, a California-chartered commercial bank, provides high-value, relationship-based banking products, services, and solutions to its clients through its Retail Bank, Commercial Bank, Merchant Bank, and Correspondent Bank. They recently just expanded to provide brokerdealer services through a subsidiary called Opus Financial Partners.

Opus Bank (“Opus” or the “Bank”) OPB, -0.54% announced today that it has established and received regulatory approval for Opus Financial Partners, LLC (“Opus Financial Partners” or “OFP”), the broker-dealer subsidiary of the Bank. Opus Financial Partners will further enable Opus’ Merchant Bank to help its clients address their financial and advisory needs related to raising equity capital, targeted acquisition and divestiture strategies, general mergers and acquisitions, debt and equity financing, balance sheet restructuring, valuation, strategy, and performance improvement. Dale Cheney, Senior Managing Director, Head of the Merchant Bank, will also lead Opus Financial Partners.

Dale Cheney, Senior Managing Director, stated, “Opus Financial Partners’ capabilities complement Opus’ Merchant Bank by providing a comprehensive and integrated capital and advisory solution to lower middle-market companies, business owners, and private equity groups.” Cheney added, “The traditional investment banking model, with its layers of intermediaries and capital providers, is inefficient and outdated for today’s dynamic business environment where business owners and entrepreneurs are constantly challenged by limited time and resources. We partner with these executives and their companies to provide a sophisticated, one-stop capital and advisory solution that allows them to focus on building a successful business.”

Stephen H. Gordon, Opus Bank’s Founding Chairman, CEO & President, commented, “There is a void in the lower middle-market where access to debt and equity capital is limited and delivered inefficiently. Additionally, even successful companies that want to expand and grow their businesses typically don’t have access to the sophisticated M&A and other advisory services they need in order to capitalize on strategic opportunities and remain competitive. The capabilities provided through Opus’ Merchant Bank and through our broker-dealer, Opus Financial Partners, will help our clients to thoughtfully and strategically grow, capitalize or monetize their business.” Mr. Gordon concluded, “Having begun my career over 30 years ago as an investment banker, I recognize that we have an opportunity to fill a void and address a significant need by building a market-leading West Coast-based merchant bank that adheres to Opus’ entrepreneurial philosophy of partnering with our clients, as opposed to simply serving as transaction advisors.”

Finra Rule for BrokerDealers Cause Confusion

Posted on February 2, 2015 by admin

Brokerdealer.com blog update courtesy of JDSupra Business Advisor. Finra

The number of independent brokerdealers has continually decreased due to low interest rate. Many of these brokerdealers have joined up with already established financial firms and that’s where things get murky. Finra’s rule 1017 has caused a lot of confusion, this hopefully will help clear it up.

M&A transactions involving regulated broker-dealers often require Financial Industry Regulatory Authority (FINRA) approval under NASD Rule 1017. Such approval is required for any direct or indirect acquisition by a broker-dealer of another broker-dealer,1 change in control of a broker-dealer or “material change in business operations” of a broker-dealer.

Rule 1017 has gained prominence in light of recent consolidation within the independent broker-dealer industry, which experienced a decrease in broker-dealers registered as members of FINRA from 4,905 in 2008 to 4,105 as of October 2014.2 The consolidation has been driven by low interest rates (which have harmed independent broker-dealers by decreasing revenues from lending on margin) and difficult business conditions following the credit crisis. At the same time, the requirements of Dodd-Frank and other new regulations have imposed additional compliance costs on independent broker-dealers.

The timing and ultimate outcome of the Rule 1017 process are often critical factors in broker-dealer M&A transactions. Participants in broker-dealer M&A transactions may be unable, without FINRA assistance, to determine whether a transaction requires approval under Rule 1017. If Rule 1017 approval is required, uncertainties as to the likely timing for approval may further complicate the transaction.

Scope of Rule 1017 in the Context of M&A Transactions

A FINRA member broker-dealer that undergoes any of the changes described in Rule 1017 is required to file an application for FINRA’s approval under the rule. Some common examples of transactions requiring Rule 1017 approval include:

acquisition or disposition of a controlling block of the equity securities of a broker-dealer, or of an equity interest that represents less than a controlling interest but 25 percent or more of the outstanding equity securities of the broker-dealer;
acquisition or disposition of an asset management firm that includes a broker-dealer subsidiary or affiliate (such as a hedge fund management firm that uses a broker-dealer subsidiary to trade securities and/or raise capital for its funds and other products); and
acquisition or disposition of assets that will materially change the business operations of the acquiring and/or disposing broker-dealer, such as may be encountered in the acquisition of a material amount of revenues attributable to sales of securities (e.g., mutual funds).

FINRA approval is required as a condition to closing each of the foregoing types of transactions and, in many cases, requires a longer period of time than any other closing condition — thus becoming the “critical path” to completing the deal.

For the entire article, click here