Ex-Morgan Stanley Brokerdealer Stole and Posted 900 Clients’ Data

Posted on January 7, 2015 by admin

Ex-Morgan Stanley employee Galen Marsh

Brokerdealer.com courtesy of Business Insider’s Julia La Roche and Elena Holodny.

Big name brokerdealer firm Morgan Stanley took a hard hit this week after a now ex-employee stole more than 900 clients’ information and released it online.

Business Insider’s Julia La Roche originally reported on the story on 5 January.

Morgan Stanley said it has fired an employee who had stolen data from 900 of the firm’s wealth management clients.

“While there is no evidence of any economic loss to any client, it has been determined that certain account information of approximately 900 clients, including account names and numbers, was briefly posted on the Internet. Morgan Stanley detected this exposure and the information was promptly removed,” Morgan Stanley said in a statement.

The name of the terminated employee has not been released.

For Morgan Stanley’s original press release, click here.

On 6 January Businesss Insider’s Elena Holodny wrote a follow-up story including a statement from the terminated employee.

The former Morgan Stanley employee who stole data from 900 of the firm’s wealth-management clients and posted it on the internet has come out with a statement.

Galen Marsh is “extremely sorry for his conduct,” his lawyer told Michael J. Moore for Bloomberg Businessweek, insisting that Marsh did not intend to profit off of the act.

“Mr. Marsh did not sell nor ever intend to sell any account information whatsoever,” Marsh’s lawyer told Bloomberg. “He did not post the information online. He did not share any account information with anymore nor use it for any financial gain. He is devastated by what has occurred and is extremely sorry for his conduct.”

He did not say why Marsh stole the data.

Morgan Stanley announced on Monday that the firm fired an employee, Marsh, who stole data from 900 of the firm’s wealth-management clients and then posted it on the Internet.

“While there is no evidence of any economic loss to any client, it has been determined that certain account information of approximately 900 clients, including names and numbers, was briefly posted on the internet,” Morgan Stanley said in a statement.

Information for as many as 350,000 wealth-management clients was stolen, Bloomberg reports. The firm detected account information for 900 of them on an external website.

Ladenburg Thalmann Financial Services Acquire Brokerdealer Firm

Posted on January 6, 2015 by admin

Brokerdealer.com blog update courtesy of South Florida Business Journal’s Nina Lincoff profiles a financial service’s recently acquisition of brokerdealers services.

Brokerdealers are at the center of the securities and derivatives trading process therefore making them a great asset to any financial services firm. Services that brokerdealers offer very important and valuable tools to any financial services firm. Recently, Miami-based Ladenburg Thalmann realized this and made a $45 million venture to acquire the Knoxville, Tennessee-based independent broker-dealer and advisory firm, Securities Service Network.

Miami-based Ladenburg Thalmann Financial Services said Monday it had completed its $45M acquisition of a Knoxville, Tenn.-based independent broker-dealer and advisory firm.

With the acquisition of Securities Service Network, Ladenburg Thalmann adds about $13 billion in client assets and about 450 independent financial advisors, according to a news release. For the 12 months ended June 30, SSN generated about $115 million in revenue.

The acquisition, announced in September, consists of a $25 million cash payment and $20 million in four-year notes. The purchase follows a string of purchases by Ladenburg Thalmann, including a November acquisition of a broker-dealer that added $2.5 billion in assets to the company.

Ladenburg Thalmann’s chairman and principal shareholder is billionaire Dr. Phillip Frost, CEO of Miami-based Opko Health. Frost acquired 100,000 shares of Ladenburg Thalmann stock at nearly $4.09 a share, or a total of just over $400,000, the same day the acquisition was announced.

For Lincoff’s original article in South Florida Business Journal, click here.

Like Magic! Russian Hedge Fund’s Money and Boss Disappear

Posted on January 5, 2015 by admin

Brokerdealer.com blog update is courtesy of The Wall Street Journal’s Bradley Hope.

As part of the membership to Brokerdealer.com, members have free access to an investor database that offers access to many different types of investors including hedge funds. When picking your next investor, whether it be on a national or international level, be sure to pick an investor who you can trust and won’t lose all of the company’s assets like the Russian hedge fund, Blackfield Capital CJSC recently experienced.

Blackfield Capital CJSC was one of Moscow’s hottest hedge funds, hosting glitzy parties and embarking on ambitious plans to expand to the U.S.

The firm’s founder in 2013 even rented a Manhattan apartment for a record-setting price, according to a real-estate broker, and instructed his U.S. staff to buy a $300,000 sports car.

Now, the founder is missing, allegedly along with all of the firm’s assets, according to former employees, in an international mystery that has captivated Moscow’s investment community.

The firm’s employees didn’t know anything was amiss until mid-October, when three men charged into Blackfield’s offices in an upscale complex along the Moscow River in central Moscow, said people who were there.

The men, who didn’t identify themselves, said they were looking for Blackfield’s 29-year-old founder, , according to the people who were there.

But Mr. Karapetyan wasn’t in the office that day or the next, when senior executives explained to the staff of about 50 that there was no longer any money to pay their salaries, said one former senior executive and ex-employees. The executives disclosed that all the money in the company accounts—some $20 million, including investor cash—was also missing, they said. It couldn’t be determined whether investors were from Russia or other countries.

“Our CEO just…disappeared,” said Sergey Grebenkin, one of the firm’s software developers, in an interview.

Efforts to reach Mr. Karapetyan by phone, email and through associates and friends weren’t successful. Other senior executives didn’t respond to requests for comment.

Mr. Karapetyan hasn’t been accused of any wrongdoing. It couldn’t be determined whether the firm was still operating.

Interviews with more than a dozen former employees and executives at rival investment firms in Russia, as well as documents from the U.S., Russia and the U.K., provide a look at the firm’s demise.

Blackfield was launched in 2009 with plans to be on the cutting edge of modern markets. The firm focused on algorithmic trading, or the use of statistical analysis to detect patterns in the markets, on the Moscow Stock Exchange. By 2013, Blackfield traded as much as 2% of futures and options contracts on the Moscow exchange some days, according to former employees and rival firms. Several former employees said Mr. Karapetyan told them the firm once managed as much as $300 million.

For Hope’s entire Wall Street Journal article, click here.

IPO Market Recovers, Gives Some Hope to Silicon Valley, But Not Much

Posted on December 31, 2014December 31, 2014 by admin

Brokerdealer.com blog update profiles the recovery of the IPO market and the effects it had on Silicon Valley companies courtesy of Venture Beat’s Chris O’Brien.

Although it was a great year for IPOs, it was not necessarily a good for brokerdealers, as O’Brien explains later on, returns on IPOs in 2014 took a dramatic drop compared to returns on IPOs in 2013. Nonetheless, a strong IPO showing is projected for 2015, which could create big returns for brokerdealers in the New Year. In addition, Silicon Valley has plenty to stress as about as there wasn’t a huge IPO growth made in tech industries, the surge of IPOs came from health and biotech fields.

A tech industry that had spent years waiting for a revived IPO market finally got its wish in 2014.

The overall IPO market reached a level not seen since 2000. And Silicon Valley companies rode that wave as venture-backed IPOs soared, according to year-end data from Renaissance Capital.

Within these ample gold and silver linings, there are a few clouds looming for the tech industry as well.

First, let’s start with the good news. Here are the highlights from Renaissance:

The 273 IPOs in 2014 was the most since 406 IPOs in 2000.
IPOs were up 23 percent over 2013, even though there were some global scares like the Ukraine crisis and Ebola that in years past might have causes stock markets to freak out.
Money raised climbed 55 percent to $85 billion, though Alibaba accounted for $22 billion of that.
The number of venture-backed IPOs climbed to 124 this year, up from just seven in the dark economic year of 2008.
A solid pipeline and strong US economy should mean another strong IPO showing in 2015.

So, what’s there to worry about amid all this rosy news?

1. Returns were down: The boom in the number of IPOs was not necessarily great for investors. Average IPO returns were only 16 percent, a big drop from the 41 percent return on IPOs in 2013. That could put a chill on IPOs in 2015 if the trend continues.

2. Tech is not king: The surge in IPOs was led by healthcare and biotech IPOs. In particular, the overall numbers were padded by the 100 healthcare IPOs in 2014, a jump from 54 the year before. Slice off that healthcare increase, which mainly included a lot of small-cap companies, and the number of IPO offerings was about the same as 2013.

3. 2014 was very good, not great, for tech: There were 55 tech IPOs in 2014, up from 45 the year before. Those IPOs raised $32 billion, though that includes Alibaba’s $22 billion haul. Back that out, and you still have a nice increase from the $7.9 billion raised in 2013. But tech companies are hardly printing money. And talk of a bubble remains just plain silly.

4. China rules: This year will be remembered for the monster Alibaba IPO offering, followed by China’s JD.com offering that raised $1.8 billion. Those were the only two tech companies to make the list of the year’s 10 largest IPOs. And with China’s Internet population more than double that of the U.S., the center of the tech world could continue its shift to Asia.

None of these things should dampen the tech industry’s celebration of a solid year. But they’re a good reminder that Silicon Valley shouldn’t get overconfident when it comes to IPOs and think just any company with a little momentum can go public. Investors can afford to be selective.

And, really, that’s probably a good thing for all of us.

For O’Brien’s original article in Venture Beat, click here

New IPO makes Brokerdealers Hungrier for 2015

Posted on December 29, 2014December 30, 2014 by admin

Brokerdealer.com blog update courtesy of Forbes.

Brokerdealers everywhere have rejoiced, Shake Shack, a newer chain restaurant, recently applied for an IPO and set to go public in 2015. Shake Shack is known for its fresh cut fires, 100% all beef burgers and hot dogs, and most of all its delicious shakes. The chain has been growing ever since its opening in New York City in 2000 and now has 63 locations open worldwide.

Shake Shack, the New York-based burger chain created by famous restaurateur Danny Meyer, is set to go public in 2015, after filing for an IPO Monday.

The chain, which plans to list on the New York Stock Exchange under the symbol “SHAK,” details a rapid growth effort that has seen an increase from a single shack in Manhattan’s Madison Square Park to 63 locations worldwide today (about half are owned by the company, with the remainder operated by licensees.”

Restaurant concepts have proven a mixed bag in the market, as investors pore over growth prospects looking for chains that could prove as lucrative as Chipotle Mexican Grill CMG -1.73%, which has returned more than 1500% since being spun out of McDonald’s MCD -0.87% in 2006.

IPOs from companies like Noodles & Co, Potbelly and Zoe’s Kitchen were greeted with immense demand, though both stocks have taken their share of hits since debuting. More recently, burger chain Habit Restaurants has surged more than 80% since its mid-November IPO.

At a time when many legacy restaurant operators are struggling to find growth — McDonald’s certainly among them — younger chains with smaller footprints and more runway for expansion are proving attractive.

Shake Shack reported $140 million in system-wide sales for its 2013 fiscal year, up from $81 million the prior year, with 56% of revenue from its domestic, company-owned locations. Total revenue, which only includes licensing revenue from non-owned locations, was $83.8 million in 2013, up 41% from the prior year. Net income declined to $3.5 million, from $4.4 million the year before, due to a sharp increase in expenses, largely attributable to higher food costs and costs associated with opening new locations.

Growth is likely to come both abroad and at home. Aside from New York, with 15 locations, no U.S. state has more than four Shake Shacks.

“Fast-growing restaurant concepts are still hot,” says Paul Bard of IPO research firm Renaissance Capital. “Habit opened up 100% so comparable companies will see that as an opportunity and there’s a whole crop of fast-casual burger chains out there.”

Bard also points to chicken chain Bojangles and Focus Brands, a franchiser of Cinnabon and Carvel, as potential names to watch for on the 2015 IPO market as investors continue to look for growth in the consumer space.

The U.S. economy’s slow recovery and improved consumer spending is certainly a help to restaurants, but Shake Shack’s filing notes that the company’s initial expansion occurred in a far more difficult environment.

“We’ve never believed that Shake Shack only thrives in a down economy, but growing from one to 15 Shacks smack dab in the heart of the recession told us that we also don’t need a robust economy to build our business,” Meyer and CEO Randy Garutti wrote in a letter to prospective shareholders.

Meyer is listed among the shareholders who control at least 5% of Shake Shack’s shares, along with affiliates of private equity firm Leonard Green, Select Equity Group, Alliance Consumer Growth, and Jeff Flug, president of Union Square Hospitality Group, the parent company of Meyer’s other restaurant ventures, and a Shake Shack board member.

The language in the Shake Shack filing also reveals the controlling hand Meyer will maintain at the company post-IPO. He and his affiliates will be entitled to nominate a certain number of directors — five as long as he maintains 50% of his post-offering holdings, and sliding down from there — and must grant approval for a variety of corporate actions, including a sale of the company, firing or hiring of a new CEO or a change in board size, so long as the group keeps 10% of its post-IPO shares.

For the original Forbes article, click here.