Expert Lawyer Says SEC Broken Windows Approach to Enforcement is Broken

Posted on December 24, 2014 by admin

Brokerdealer.com blog update courtesy of extracted opinion piece published Dec 22 by Pensions & Investments Magazine and submitted by Andrew Stoltmann, a partner at Chicago-based Stoltmann Law Offices PC, who represents investors in securities litigation and FINRA arbitration claims.

“..The Securities and Exchange Commission is unfortunately pursuing a fundamentally flawed strategy to police the capital markets and protect investors.

Last year, SEC Chairwoman Mary Jo White disclosed she intends on pursuing a “broken windows” strategy for securities enforcement. The SEC intends on prosecuting even minor violations of the federal securities laws in order to prevent wrongdoers from engaging in even more egregious conduct.

The theory is that when a window is broken and someone fixes it, it is a sign that disorder will not be tolerated. When a broken window is not fixed, it is a signal that no one cares, and so breaking more windows, and more serious crime, will follow. This approach is the one taken in the 1990s by New York City’s then-Mayor Rudy Giuliani and Police Commissioner Bill Bratton back when Ms. White was the U.S. attorney for the Southern District of New York, which includes Manhattan.

Unfortunately, the “broken windows” strategy championed by Ms. White is fundamentally flawed. By going after minor offenses, it artificially inflates the SEC’s enforcement actions and gives the appearance of being tough on bad actors. In reality, it is a mirage. Continue reading →

Fantasy is Reality For This Investment Banker

Posted on December 18, 2014 by admin

Drew Dinkmeyer

Brokerdealer.com blog update courtesy of Wall Street Journal.

For one brokerdealer his enjoyment for fantasy sports turned into a profiting, full-time career

Drew Dinkmeyer was a 31-year-old investment analyst when, two years ago, he decided to do something that most people would consider clinically insane: He quit his job in finance to play fantasy sports for a living.

Dinkmeyer, who was profiled in a front-page Wall Street Journal story on his last day of work in 2013, was one of the earliest stars of daily fantasy sports, a twist on the traditional game in which players draft new teams every day instead of sticking with them for a full season.

It turns out that Dinkmeyer wasn’t crazy at all. At the time, he said, he was already making as much money playing fantasy sports as he was in finance. That hasn’t changed since his side job became his full-time job, he says.

He also just hit his version of the jackpot. Last week, along with more than 100,000 contestants, Dinkmeyer entered a football tournament hosted by the DraftKings daily-fantasy site—and Dinkmeyer won first place.

The prize: $1 million.

“I’ve had profitable years in both baseball and basketball so far,” he said Tuesday, “and now football is going to be a hugely profitable year.”

Dinkmeyer entered 49 teams into last weekend’s “Millionaire Maker” tournament. Each entry cost $27 for a total investment of about $1,300. For the 44th of his 49 teams, Dinkmeyer drafted New York Giants quarterback Eli Manning and wide receiver Odell Beckham Jr., a combination that combined for six touchdowns on Sunday, much to Dinkmeyer’s surprise. Manning had never worked out for him in the past. “It has been a disaster,” he said. “For years, I’ve been afraid to use him, because I don’t feel like I have a good read on him.

For the full article from Wall Street Journal, click here.

Technology Lets Everyone Be Their Own BrokerDealer

Posted on December 17, 2014 by admin

B millennial-money-matters_645x400 rokerdealer.com blog update courtesy of Wired.com

One app is making it their mission to let everyone become their very own BrokerDealer with the use of their iPhone.

Robinhood, an iOS app that is going live in the App Store on Thursday. Robinhood uses swipes and taps to make trading stocks feel more like checking your email. Available just on iPhones (for now), the app re-imagines the brokerage as a mobile-only enterprise that fits in your pocket, where you keep the rest of your money. Whether making trades as accessible as Facebook updates is a good idea or not, the era of Touch-ID trading has arrived.

“We think it’s not a particularly engaging activity for a lot of people,” Robinhood co-founder Baiju Bhatt says of investing in the stock market. That alienation afflicts people in their 20s especially, Bhatt says. “If people don’t think about their finances and get involved with building a financial trajectory early in life, it’s kind of a substantial problem.”

In its run-up to launch, Robinhood has amassed a waitlist of a half-million would-be users, according to Bhatt.

Ease of access and understanding is meant to make Robinhood compulsively engaging for a new generation of investors that don’t find the stock market very accessible from the mobile screens at the center of their lives. It took me five minutes to sign up for an account, including a simple username-and-password interface for linking my bank account—no blank checks or routing numbers. The only lag time so far is waiting for the money to transfer into my trading account, which could take up to three business days, according to the app. Accounts do not require a minimum balance.

“As soon as people made one trade, we saw that they became daily users of the app,” co-founder Vlad Tenev says of Robinhood’s beta testers. On average, they started opening the app an average of twenty times per week, he says. “It’s more similar to looking at your email or your Twitter than, say, a banking or finance app.”

As the product develops over time, Bhatt says Robinhood will include features inspired by behavioral economics to nudge users toward smarter ways of managing their money.

But more important than teaching, he says, is letting new entrants to the market learn for themselves, to feel like their money is their own to use, move, and manage. “There’s just something very, very satisfying feeling like I have my investments right there in my pocket.”
For the complete article from Wired.com click here.

BrokerDealers Crow About Crowdfunding

Posted on December 11, 2014 by admin

Crowdfunding Brokerdealer.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-funding Congress 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

BrokerDealer-Backed Consortium That Seeks to Boot Bloomberg Chat Adds to IT Arsenal via Sweet Sounding Acquisition by Supplanter Symphony Communications

Posted on December 5, 2014December 6, 2014 by admin

BrokerDealer.com blog update courtesy of prior reporting here and extract from Dec 1 WSJ story by Justin Baer.

An instant-messaging software company that has drawn investments from Goldman Sachs Group Inc. and other big banks signed a deal to buy a chat business from a potential rival.

Symphony Communication Services LLC acquired an arm of Markit Ltd., a financial-data firm that went public earlier this year, the companies said.

The purchase, Symphony’s first since a group of 14 banks and money managers helped start it in October, underlines how Wall Street has quickly coalesced around the Silicon Valley startup as a solution to one of the industry’s most pressing technology challenges: finding a way for employees to communicate with one another, instantly and securely.

It also represents an exit for Markit, which a year ago had launched its own messaging initiative for bankers and traders. The sale isn’t expected to have a material effect on Markit’s results. Fewer than 20 Markit employees are relocating to Symphony as part of the sale of the unit, known as Collaboration Services, a person familiar with the deal said. Terms aren’t expected to be disclosed when the deal is formally announced Tuesday.

David Gurle, Symphony’s chief executive, said in an interview that the company had considered building its own directory before reaching out to Markit in recent weeks to discuss a potential deal. In buying Markit’s business, Mr. Gurle said Symphony probably saved 18 months of development time. “They had a capability we would have ordinarily had to build ourselves,” Mr. Gurle said.

The transaction includes the software that powers Markit’s directory service, which functions as a centralized “phone book” for financial firms that can be customized to meet compliance rules.

Symphony’s emergence may help loosen Bloomberg LP’s grip on the securities industry. The financial-data company’s chat services remain ubiquitous on trading floors. But the price of a Bloomberg terminal, about $20,000 a year, has grated on some finance executives.

If Symphony’s platform spreads quickly through Wall Street, bank executives have said, it could pressure Bloomberg to relent. A Bloomberg spokesman didn’t immediately respond to a request for comment. Bloomberg’s news service competes with Dow Jones & Co., publisher of The Wall Street Journal.

On Monday, Mr. Gurle said the messaging platform is still on track to launch in July.

Led by Goldman, a group of financial firms invested $66 million in Symphony. The group, in turn, acquired Perzo Inc., a Palo Alto, Calif., company founded in 2012 by Mr. Gurle. Goldman, which led the investment among the financial firms, contributed its own internal messaging developments to the venture.

Founded more than a decade ago, Markit had drawn investments from financial firms such as J.P. Morgan Chase & Co., Bank of America Corp. , Deutsche Bank AG and Goldman. All four of those banks were among the firms that have backed Symphony.

Markit sought to allow financial firms’ in-house messaging platforms to communicate with one another, he said. Symphony and its backers are betting that financial-services firms need a better system than they could develop on their own.

To read the complete coverage, please visit the WSJ via this link.