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.

BrokerDealer.com provides a comprehensive global database directory with information for thousands of broker-dealer firms in more than 30 countries throughout the free market world.

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.

The post SEC Appointment Of In-House Judge “Likely Unconstitutional” appeared first on BrokerDealer Blog.

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.

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

The post International Fraud Lands New York BrokerDealer In Hot Water appeared first on BrokerDealer Blog.

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.

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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.

The post Etsy’s IPO Plan Is Very Crafty appeared first on BrokerDealer Blog.

Vikram Chopra spent the past three years building an online furniture-shopping site for Indian consumers that was funded mainly by annual capital injections from a German technology incubator.

But during the past few months, investor interest in the site, FabFurnish.com, has soared, said the 32-year-old entrepreneur, who is based in the New Delhi suburb of Gurgaon. Several global venture-capital firms and hedge funds have said they are interested in investing, and Mr. Chopra is now considering another round of funding that would exceed the $20 million raised so far—even though he doesn’t expect FabFurnish to be profitable for another two years and doesn’t yet need the cash.

“A few years ago, everybody wanted to see profitability upfront,” said Mr. Chopra. “Today, it is more like how much money you need to curb the competition [and] kill everyone else.”

Global money is flooding into Indian startups as investors search for a successor to Alibaba Group Holding Ltd., the Chinese e-commerce company that raised a record $25 billion in its initial public offering last year.

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

The post Indian Startups Gather Interest and Venture Funding From BrokerDealers Everywhere appeared first on BrokerDealer Blog.

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

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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.

The post Like Magic! Russian Hedge Fund’s Money and Boss Disappear appeared first on BrokerDealer Blog.

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.

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