wall street financiers | Wall Street Financier: Notes from High Altitude©

Direct Listings on NYSE get a Green Light

Max Cantor — Sun, 30 Aug 2020 20:36:44 +0000

This past week two significant developments I would like to bring to the attention of you finance guys.

One is NYSE getting the green light to direct listings, which is what Palantir Technologies will use as early as next month.

“The Council of Institutional Investors, a group of pension funds and other big money managers, asked the SEC to reject the plan…
Unlike an IPO in a direct listing there is no bank acting as a ‘stabilization agent’ to prop up the stock if it falls sharply after its debut…
Nasdaq has a similar proposal on the table.”
The Wall Street Journal, Aug. 26, 2020

Another one is the SEC expanding its definition of accredited investors.

“Previously, to qualify as accredited investors, individuals need to have a net worth of at least $1m excluding the value of their primary residence, or an annual income of at least $200k for the last two years [300k if married and filing jointly] . Now, many more people may be able to make those investments, if they can prove that they are knowledgeable enough, including employees of investments firms or governmental bodies.
SEC Commissioner Hester Pierce tweeted Wednesday: “Americans shouldn’t have to ask the SEC for permission to invest, but today’s accredited investor rule at least offers people a path to ask permission based on their education, rather than simply telling them ‘no, unless you’re rich.’”
WSJ, Aug. 26, 2020

“The Commission indicated that it preliminary expected that the initial Commission order accompanying the final rule would include the following certifications or designations administered by the Financial Industry Regulatory Authority, Inc. (FINRA): the Licensed General Securities Representative (Series 7), Licensed Investment 14 Adviser Representative (Series 65), and Licensed Private Securities Offerings Representative (Series 82).”

Change, please ?

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SPACs 101

Max Cantor — Sat, 22 Aug 2020 17:29:19 +0000

An easy primer for you finance literati was written here @Tech Crunch , and that includes answering the MOST asked question about them: how much do Spacs sponsors make ?

“The rough rule of thumb is 2% of the SPAC value, plus $2 million.”

and the 2nd most asked question, why is the unit price of SPACs $10.

The Gold market basics were nicely outlined in a WSJ article recently (Joe Wallace, Aug. 17th, 2020). Describing the gold market doesn’t get any clearer than that.

Excerpts:

“How does the physical market work ?
Deals to buy, sell and lend gold in London are struck privately, rather than on exchange. To reduce the amount of metal that has to be shunted from vault to vault, five banks act as clearing house, balancing out each other’s sales and purchases. Some of them provide vaults, offering clients a safe place to stash gold. The Bank of England guards more than 400,000 bars beneath the narrow streets of the City of London, largely on behalf of the U.K. government and other central banks, a hoard second only to Feds in NY. Princes are quoted by troy ounce (14.6 troy ounces to pound instead of the standard 16) of pure gold, and bullion trades in batches of 400-ounce bars. London prices are fixed in twice-daily auctions and act as a benchmark throughout the physical market. When a watchmaker buys gold from a refiner, it usually does so at a premium to the London price…”
WSJ

That Old Snikeroo Buffett selling airlines shares and buying gold…he knows what he’s doing.

The post SPACs 101 first appeared on Wall Street Financier: Notes from High Altitude©.

Andrew Caspersen sentencing

Max Cantor — Mon, 07 Nov 2016 18:40:00 +0000

Andrew Caspersen, a “scion” of Wall Street was recently sentenced to four years in prison for defrauding investors including friends, family members and a charity foundation out of $38.5 MM in a Ponzi-like scheme.

That sentence came out the lower end of the sentencing guidelines, as prosecutors have sought out a 15 2/3 years sentence.

Andrew Caspersen worked at Paul Taubman PJT Partners Inc before his arrest in March, Reuters reported.

Apparently, Judge Rakoff was swayed by arguments from the defendant’s lawyer that Caspersen’s addiction to trading stock options was “akin” to a gambling addiction. “In February, he made so much money that he could have payed back everyone and still had $60 MM left over.” (NYT).

Unfortunately, this case again brings attention to an isolated bad actor in the finance industry. Already the finance industry is under intense scrutiny from regulators and the general public into example of “excesses” that all to often become the leading narrative. The [more than] 99% [to borrow the headlines] of finance workers are hard working individuals who work hard, have the highest ethics and morality and contribute to their community and constituency. Wall Street is the highest job generating engine that I know, its effects reverberating into the national economy on multiple levels.

When judging the fairness of a sentence, I look at:

Background and priors/ recidivism. No priors here.
Length of the criminal behavior engaged in. We are told it was 18 months to detection (?) and arrest, which is medium, certainly falling short of a Madoff Ponzi.
Severity of the crime /impact. I’d argue it was severe. I’d give 50% weight on impact if it said most of the money lost was friends and associates. [That doesn’t make it OK to steal from them !] Family and friends have an intimate knowledge of a subject, not available to outside investors. Breaking their trust is harder and also harsher. The moral turpitude of stealing from them is a heavy one. Breaking their trust is conduct that falls into some pathological model. A logical, reasoning human being driven by greed alone would likely abstain from fleecing his own family and associates. Mr. Caspersen’s privileged upbringing is another reason where I can see pathology here. His higher station in life made his acts all more reprehensible.
What is the restitution or recovery probability. Mostly unknown [but unlikely].
Age: 40 years old, could take a longer sentence on account of good health and youth. Age can be interpreted differently, a younger age and the existence of a family can be argued for a lighter sentence for rehabilitation and reintegration in the society [wasting a productive life is often argued in courts] .
Exemplary punishment need. Was it meant to set a strong message ? Certainly not.

You get your pick and you can actually make it into a math formula.

Was it fair ? I think it gave Caspersen a break, but it was not necessarily fair to his colleagues and victims.