SEC Appointment Of In-House Judge “Likely Unconstitutional”

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Secruities and Exchange Commission could face potential problems after a federal court ruled that its appointment of an in-house judge to preside over administrative insider trading cases was “likely unconstitutional.”

BrokerDealer.com update profiles what could turn into a legal brouhaha as the SEC’s recent strategy to use internal arbitrators could prove to be a major conflict of legal interest, as U.S. District Judge Leigh Martin May’s decision Monday that the SEC may not have the authority to divert such cases from regular courts halted its action against a Georgia real-estate developer. Charles Hill was accused of profiting from trades made after he received a tip from a friend. He sued in Atlanta federal court to block the administrative action.

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The SEC has increasingly been using its five administrative-law judges to hear its cases, rather than sending them to federal court, legal experts said. Although the ruling was preliminary, and won’t necessarily be duplicated in other federal courts, it could have ramifications for other SEC cases and potentially other federal agencies.

The decision is the first by a federal judge to find the SEC’s in-house tribunal could breach the Constitution. Previous constitutional challenges to the SEC’s system of judges, based on different legal arguments, have been inconclusive or unsuccessful.

To read more, check out this article by the WSJ.

Brace For Impact: China Nuclear Firm Plans For Explosive IPO

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Brokerdealer.com blog update profiles an explosive IPO coming from a top China nuclear power giant, China National Nuclear Power Corp. The nuclear power giant is hoping to raise as much as $2.16 billion, making it China’s largest IPO in the last five years. This IPO follows China’s recent efforts to move away from coal as power source. The China Securities Regulatory Commission approved the IPO on Friday, 22, 2014, and the launch date for CNNPC’s IPO is scheduled for June 2, 2015. This blog update is courtesy of the Wall Street Journal’s article, “China Nuclear Firm Plans Biggest Domestic IPO in 5 Years” by Yifan Xie, with an excerpt below.

To find an international brokerdealer to help you invest in this huge new IPO, click here.

China National Nuclear Power Corp., one of the top two state nuclear-power giants, will raise as much as $2.16 billion in what is set to be the country’s largest domestic initial public offering in five years.

CNNPC plans to sell up to 3.89 billion new shares, or a quarter of its total, in the sale, according to its IPO prospectus, filed to the Shanghai Stock Exchange on Monday. The offering’s expected launch date is June 2.

The share float is poised to be the largest in the domestic market since China Everbright Bank Co. raised $2.6 billion in Shanghai in August 2010, according to data provided by Dealogic.

China National Nuclear Group holds a 97% stake in CNNPC. About 40% of China’s total nuclear energy is generated by operators controlled by CNNPC. Excluding issuance-related fees, the firm will raise 13.4 billion yuan ($2.16 billion), according to the prospectus. CNNPC will allocate 4.18 billion yuan of the raised capital to replenish its holdings of cash, and will invest the rest in the construction of projects in Fujian, Zhejiang, Hainan and Jiangsu provinces. Citic Securities, UBS AG and China Securities are the underwriters for the deal.

To continue reading about this explosive new IPO about to hit the markets, 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

Etsy Vendors Will Be Able To Invest In Themselves

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Brokerdealer.com’s blog update continues coverage of the Etsy IPO. On Thursday, Etsy’s IPO will finally be launched, they have unique plan to target small investors and focus on fewer big investors as part of its plan for their IPO and now it has been release that Etsy’s vendors will be able to invest in themselves. Etsy has set aside 5% of shares for Etsy vendors to purchase through a Morgan Stanley program. The vendors can buy between $100-$2,500 worth of Etsy stocks, how much vendors get will ultimately depend on the pricing and demand of Etsy’s IPO. This brokerdealer.com blog update is courtesy of the Wall Street Journal’s article, “Etsy Vendors to Get a Piece of IPO“, with an excerpt below. 

Jeni Sandberg usually deals in vintage and collectible items, not in hot new stocks. Still, the home-based art appraiser and consultant plans to take a stake in Etsy Inc. when shares in the online marketplace go public this week.

Ms. Sandberg, who lives in Raleigh, N.C., has been a vendor on Etsy for five years, earning income from her sales there and from work as an art consultant. A former specialist at auction house Christie’s, she manages her own investments and is “by no means a massive player in the financial market.”

When it comes to initial public offerings of stock, “you’re always told, ‘You can’t participate. You’re not part of a financial syndicate. Go away, little person,’” she said.

Etsy, whose IPO is expected to price Wednesday and begin trading Thursday, sought to remedy that lack of access for its vendors and other small investors with a program that gives them the opportunity to buy as much as $2,500 in Etsy stock just before its public float, which aims to raise as much as $267 million. Ms. Sandberg plans to claim her full allotment. “This, I want to do,” she said.

To read the full article from the Wall Street Journal, click here.

Etsy’s IPO Plan Is Very Crafty

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Etsy is a peer-to-peer e-commerce website focused on handmade or vintage items and supplies, as well as unique factory-manufactured items. Last month, brokerdealer.com profiled  Etsy’s preperation for an IPO, now new details are emerging about Etsy’s plan for its IPO. Etsy hopes to target small investors and focus on fewer big investors as part of its plan for their IPO. By using this unusual practice, Etsy hopes to gain shareholders who share in Etsy’s commitment to socially responsible business practices. This brokerdealer.com blog update is courtesy of the Wall Street Journal’s article, “Even Etsy’s Initial Public Offering Process Is Artisanal” with an excerpt below.

Leave it to Etsy Inc. to craft an artisanal public offering.

The Brooklyn, N.Y.-based online marketplace for handmade and vintage goods has altered the playbook for its initial public offering, launching an expansive effort to attract small investors and focusing on fewer big investors, according to people familiar with the deal.

The custom-made process is intended to build a shareholder base that is on board with what Etsy says is its commitment to socially responsible business practices and its plans to spend heavily on marketing to grow its membership over the next few years, the people said.

But going off script comes with some risk. The moves include limiting the amount of stock retail investors can get in the IPO to $2,500 so more individuals can take part, and concentrating many of the shares among a relatively small number of big holders. The approach could turn off some traders whose presence can help stabilize a stock once it begins trading.

To continue reading about Etsy’s plan for its IPO from the Wall Street Journal, click here.