The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
June 11, 2020
I landed my dream job in a Broadway show, then Covid-19 shut it down (CNBC by Cory Stieg)
https://www.cnbc.com/2020/06/10/performer-made-broadway-debut-then-covid-19-shut-down-show.html
CNBC's Stieg crafts a moving story about unemployed actor Chiara Trentalanghe, who, on February 15, 2020, debuted on Broadway in the "Girl from the North Country." Trentalanghe's star shone for about a month. Then the stage went dark. In response to the COVID pandemic, the Belasco Theater closed on March 12th.
'Fraud' lawsuit slams Plaid on eve of historic $5.3-billion payday; some experts say it's a 'fishing expedition,' but plaintiff's lawyers say, 'This is no shakedown' / It's been six months since Visa agreed to a wild valuation for the seven year-old Yodlee competitor that caused wealth fintechs to retain investment bankers left and right. (RIABiz by Oisin Breen)
https://riabiz.com/a/2020/6/10/fraud-lawsuit-slams-plaid-on-eve-of-historic-53-billion-payday-some-experts-say-its-a-fishing-expedition-but-plaintiffs-lawyers-say-this-is-no-shakedown
As Breen reports in part:
Filed on May 5, the suit alleges that San Fransciso-based Plaid spoofs bank and investment firm logins to finagle a vast "trove" of "wrongfully obtained" data that it resells as "consumer behavioral insights." Plaid is also alleged to have failed to disclose its process.The suit is a potentially major blow to the company just six months after its sale to Visa effectively reset valuation expectations for wealth technology deals.
https://www.cnbc.com/2020/06/10/uber-likely-to-pull-out-out-of-its-merger-talks-with-grubhub.html
Not a particularly surprising development given the tenor of the times, which is hostile to almost an major M&A and is particularly angered by reports of predatory rates imposed upon struggling restaurants by third-party providers.
Food delivery giants GrubHub, Just Eat Takeaway.com to merge after Uber talks collapse / The $7.3 billion deal creates one of the world's largest food delivery marketplaces. (Fox Business by Thomas Barrabi)
https://www.foxbusiness.com/markets/grubhub-just-eat-takeaway-com-merger-uber
https://www.foxbusiness.com/markets/grubhub-just-eat-takeaway-com-merger-uber
Fox Business' Barrabi reports in part that:
GrubHub will merge with Europe's Just Eat Takeaway.com to create one of the world's largest online food delivery marketplaces, the companies announced on Wednesday.The all-stock merger deal values GrubHub shares at $75.15 a piece, for a total equity value of $7.3 billion. Just Eat Takeaway.com already owns the leading Canadian brand SkipTheDishes, creating a food delivery powerhouse in the North American marketplace.
SEC Reaches Settlements with Traders in Newswire Hacking and Trading Scheme (SEC Release)
https://www.sec.gov/litigation/litreleases/2020/lr24833.htm
https://www.sec.gov/litigation/litreleases/2020/lr24833.htm
In a Complaint filed in 2015 and as amended in the United States District Court for the District of New Jersey
https://www.sec.gov/litigation/complaints/2015/comp-pr2015-163.pdf, the SEC had charged 32 defendants with violating federal antifraud laws and related SEC antifraud rules. As alleged in part in the SEC Release:
https://www.sec.gov/litigation/complaints/2015/comp-pr2015-163.pdf, the SEC had charged 32 defendants with violating federal antifraud laws and related SEC antifraud rules. As alleged in part in the SEC Release:
[U]krainian hackers used advanced techniques to hack into newswire services and steal hundreds of corporate earnings releases before the newswires released them publicly. The complaint alleged that the hackers created a secret web-based location to transmit the stolen data to traders in the United States and abroad. The traders allegedly used this nonpublic information in a short window of opportunity to place illicit trades in stocks, options, and other securities, sometimes funneling a portion of their illegal profits to the hackers.
DNJ entered final judgments enjoining Arkadiy Dubovoy, Igor Dubovoy, Southeastern Holding and Investment Company LLC, APD Developers, Inc., Leonid Momotok, Aleksandr Garkusha, Vladislav Khalupsky, and Memelland Investments Ltd. from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities and Exchange Act and Rule 10b-5 thereunder. The final judgments order Arkadiy Dubovoy, Igor Dubovoy, Southeastern Holding, APD Developers, Momotok, Garkusha, and Khalupsky to pay disgorgement and prejudgment interest, which is deemed satisfied by the restitution and forfeiture orders against the individual defendants in the parallel criminal actions. Memelland, which was not charged criminally, has agreed to pay disgorgement and a civil penalty. Collectively, the monetary liabilities imposed exceed $14 million. In an earlier parallel criminal actions in DNJ and in the United States District Court for Eastern District of New York, defendants Momotok, Garkusha, and Khalupsky were convicted, sentenced, and ordered to pay restitution and to forfeit assets; also defendants Arkadiy Dubovoy and Igor Dubovoy have pleaded guilty and are awaiting sentencing. Prior to these settlements, the SEC had recovered over $50 million and obtained full injunctive relief from 13 other defendants who previously agreed to settlements in this case. All claims against defendant Global Hedge Capital Fund Ltd., which has ceased operations, were dismissed.
Prices on the Bread Aisle Plunge the Most in 80 Years (Bloomberg by Katia Dmitrieva)
https://www.bloomberg.com/news/articles/2020-06-10/prices-on-the-bread-aisle-plunge-the-most-in-80-years?srnd=premium
https://www.bloomberg.com/news/articles/2020-06-10/prices-on-the-bread-aisle-plunge-the-most-in-80-years?srnd=premium
As Bloomberg's Dmitrieva reports in part, "The price of white bread dropped the most since World War II in May, according to the Bureau of Labor Statistics. " Hmmm . . . how's that? Oh, maybe it's because I've been baking semolina bread, baking sandwich bread, baking pitas, baking focaccia, baking homemade pizza, making scratch pancakes (with pecans), and making scratch waffles (with sourdough and pecans). After all, I'm socially distancing and quarantining from home, and with all that extra time I've gained from not having to commute, what the hell am I going to do other than bake?
A third of America's malls will disappear by next year, says ex-department store exec (CNBC by Lauren Thomas)
https://www.cnbc.com/2020/06/10/a-third-of-americas-malls-will-disappear-by-next-year-jan-kniffen.html
In part, CNBC's Thomas reports that:
A large majority of those malls are classified as so-called B- C- and D-rated malls, meaning they bring in fewer sales per square foot than an A mall. An A++ mall could bring in as much as $1,000 in sales per square foot, for example, while a C+ mall does about $320.Per Green Street's analysis, there are roughly 380 C- and D-rated malls out of the 1,000. And those are considered the most at risk of going dark, permanently, as they don't generate enough sales to maintain the property and have greater vacancy rates. Green Street has said C malls "are not viable retail centers long term."
Amazon unveils small business credit line with Goldman in latest tie-up between tech and Wall Street (CNBC by Hugh Son)
https://www.cnbc.com/2020/06/10/amazon-and-goldman-sachs-unveils-small-business-credit-lines-up-to-1-million.html
As reported in part by CNBC's Son:
The move is a coup for Goldman, which is working to expand its ecosystem of partners. Besides offering personal loans and deposits under its Marcus brand, CEO David Solomon said in January that the firm hoped to become a "banking-as-a-service" provider for big corporations. Last year, Goldman helped Apple launch its first iPhone-integrated credit card and followed that with a partnership with JetBlue. The bank also has deals with Intuit and AARP.By gaining data on thousands of Amazon merchants, Goldman can improve its lending models and accelerate its push into Main Street finance. For most of its 150-plus year history, the bank has focused on Wall Street clients and the ultra-wealthy. The bank started its Marcus business in 2016 to diversify from the capital markets-heavy businesses that generate most of its revenue.
Bill Singer's Comment: It was rumored that Amazon would launch an online marketplace where lenders would compete for loans -- the likely byproduct of such competition would be lower rates, enhanced terms, and better service. Instead of innovation, we get Goldman gobbling up the whole scene. The big get bigger. The small get fewer. Amazon had a chance to do something about democratizing credit but chose to simply consolidate the space. I'm not going to complain because that's how Capitalism does and should work. Amazon's supposed to generate a profit for its shareholders. I'm guessing that Bezos perceived more profit in partnering up with Goldman than creating an innovated online credit market for smaller borrowers. Perhaps some entrepreneurial soul -- a next-generation Bezos -- will see the vacant space and seize the opportunity to offer cheaper rates, quicker approvals, and better service. That too is how Capitalism does and should work.
Thematic investing is a growing trend in ETFs, researcher says, as sports betting fund launches (CNBC by Annie Pei)
https://www.cnbc.com/2020/06/10/online-sports-betting-etf-betz-launches-as-thematic-etfs-expand.html
https://www.cnbc.com/2020/06/10/online-sports-betting-etf-betz-launches-as-thematic-etfs-expand.html
As CNBC's Pei reports in part:
FINRA Imposes Fine and Suspension for Rep's Non-Disclosures of Felony, Judgments, and Liens.Roundhill Investments, creator of BETZ, was previously most well known for its esports ETF (NERD), another area that investors are looking to with the advent of a number of ETFs that have tried to capture the growth of the gaming industry and its adjacent markets.VanEck's esports ETF (ESPO), for example, is another thematic ETF "capturing investor attention in a way that very few other things do," according to Dave Nadi, director of research at ETF Trends, in that same interview. And based on lockdowns that are still in place due to the coronavirus outbreak, Nadig said thematic ETFs like BETZ and esports ETFs really grab investor attention given how they cater to the current environment.
In the Matter of Bradley Scott Kyburz, Respondent (FINRA AWC 2019062428401)
https://www.finra.org/sites/default/files/fda_documents/2019062428401
%20Bradley%20Scott%20Kyburz%20CRD%202969350%20AWC%20%20va.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Bradley Scott Kyburz submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC alleges that Bradley Scott Kyburz was first registered in 1997, and by 201, he was registered with FINRA member firm Capital Financial Services, Inc. The AWC alleges that Kyburz "does not have any disciplinary history with the Securities and Exchange Commission, any state securities regulators, FINRA, or any other self-regulatory organization." In accordance with the terms of the AWC, FINRA found that Kyburz had violated FINRA Byl-Laws Article V, Section 2(c); and FINRA Rules 1122 and 2010; and the self regulator imposed upon him a $10,000 fine and an 10-month suspension from association with any FINRA member in all capacities. Because the AWC includes a finding that Kyburz had willfully omitted to state a material fact on a Form U4, under Section 3(a)(39)(F) of the Securities Exchange Act of 1934 and Article III, Section 4 of FINRA's By-Laws, said omission makes him subject to a statutory disqualification with respect to association with a member.
As alleged in part in the AWC:
Separately, the AWC alleged that between March 2013 and August 2018, Kyburz learned that he had four reportable judgments and two reportable IRS liens. As alleged in part in the AWC:Kyburz was arrested on February 12, 2017, while associated with CFS, for driving under the influence. He was charged on March 5, 2017, in South Dakota Fifth Judicial Circuit Court with, among other things, felony driving under the influence. Although Kyburz was required to update his response to Question 14A within 30 days, or by April 4, 2017, he did not amend his Form U4 or report the charge to the Firm.On October 30, 2017, Kyburz pleaded guilty to the felony driving under the influence charge. Kyburz was sentenced the same day, and the felony conviction made him statutorily disqualified from associating with a member firm. Although Kyburz was required to update his response to Question 14A within ten days, or by November 9, 2017, he did not amend his Form U4 or report the conviction to the Firm.In 2017 and 2018, while completing CFS's annual compliance questionnaires, Kyburz also falsely stated that he had not been charged with, convicted of, or pled guilty to any felony.By willfully failing to disclose his felony charge, guilty plea, and conviction, Kyburz violated Article V, Section 2(c) of FINRA's By-Laws and FINRA Rules 1122 and 2010.
Kyburz was required to disclose the Reportable Events via the filing of an amended Form U4 within 30 days of receiving notice of their existence, but did not. Kyburz also did not disclose the Reportable Events to the Firm, and falsely stated on two annual compliance questionnaires that he did not have any unsatisfied liens or judgments other than those previously disclosed on his Form U4.By failing to disclose the Reportable Events, Kyburz violated Article V, Section 2(c) of FINRA's By-Laws and FINRA Rules 1122 and 2010.
http://www.brokeandbroker.com/5270/aegis-frumento-insecurities-education/
Guest Blogger Aegis Frumento observes that education in this country has become too expensive. We need a solution, Frumento says, because whenever a thing becomes too expensive for the masses, it becomes reserved for the privileged. Education, once thought to be the great leveler, has become in too many ways another tool for entrenching the already powerful.