Where Banks really Make Money On IPOs
All of these numbers are hypothetical, of course, but the bigger point is simple: if Goldman manages to get kickbacks, in terms of extra commissions, of more than 7% of its clients’ profits, then it has a financial incentive to underprice the IPO. And Goldman’s clients were desperate to give it kickbacks: they didn’t just route their standard trading through Goldman, since that wouldn’t generate enough commissions. Instead, they bought and sold stocks on the same day, at the same price. Capstar Holding, for instance, bought 57,000 shares in Seagram Ltd at $50.13 per share on June 21, 1999 — and then sold them, on the same day, at the same price. Capstar made nothing on the trade, but Goldman made a commission of $5,700. Capstar’s Christopher Rule says that in May 1999, fully 70% of all of his trading activity “was done solely for the purpose of generating commissions”, so that he could continue to keep on getting IPO allocations.
Rigging The IPO Game [more inside]
posted by the man of twists and turns
on Mar 11, 2013 -
Electronic Arts allegedly in talks to sell to private equity; would "do a deal for $20 a share". [NYP
] [Int. Business Times
]. The markets appear to think there's at least some substance to the rumour, as EA shares jumped more than 7% to $14 in early trades on Thursday morning and have remained at around $13.75. [Google Finance chart
posted by jaduncan
on Aug 18, 2012 -
the conditions for the Hindenburg Omen
, a combination of technical analysis indicators suggesting an increased probability of a market correction were all met (maybe
) for the first time since 2008. Fortuitous timing for the soon to be released movie
of the same name, if no one else. (Previously
posted by BigSky
on Aug 13, 2010 -
The rapid growth of electronic trading since 1976
has benefited equity market participants by improving competition, reducing cost and increasing liquidity while insuring better pricing.
One unexpected side effect has been the recent emergence of "dark pools of liquidity"
, or the secret stock market. [more inside]
posted by Mutant
on May 20, 2008 -
While the US equities markets were closed on Monday for Martin Luther King Day, stock markets around the world took a nosedive, losing billions in equity
; the markets in Australia
, South Korea
, Indonesia, Hong Kong
, the UK
, and more countries
have dropped at least 5% each (Canada
only fell 4.75%), even though most of those markets had already been seriously down for several days prior. India has been hit particularly hard
, at one point down a whopping 11%, tripping their markets' automatic "circuit breakers"
for a mandatory time-out period, before scraping back up to close at 8% down.
US futures markets are currently predicting a 650+ point drop just at the open Tuesday morning
, before even a single trade goes through. [more inside]
posted by Asparagirl
on Jan 22, 2008 -
At a time when fed-up American citizens are petitioning Congress
to end the imprudent financial practices that caused the
housing bubble sub-prime mortgage crisis liquidity crisis
impending recession -- including the banning of SIV's
and refusing any bailouts
for Wall Street, banks, or mortgage companies -- the United States Treasury Department has just announced
the creation of a giant-mega-ultra SIV called "M-LEC" made up of assets from several of the largest American banks. Already unofficially nicknamed "Sivie Mae" (or worse, "the Frankenstein Fund"
), it would be an off-balance-sheet way for these banks to pool and price the ABCP
's that they've lately been having trouble pricing and thus selling -- i.e. the liquidity crisis. [more inside]
posted by Asparagirl
on Oct 16, 2007 -
A New Kind of Bank Run. ...a new financial architecture has emerged that relied more on securities and less on banks as intermediaries. With the worth of [these new] securities now being questioned — and no equivalent of deposit insurance — some who financed the securities want their money out, a fact that has created the 21st-century equivalent of a run on a bank.
. It's no wonder these securities are being questioned, when some are based on Ninja mortgages
and foreclosures are up 58% from last year.
posted by storybored
on Aug 10, 2007 -
Want to learn about investing?
Morningstar, an independent investment researcher, is offering 172 free online "classes" on stocks, bonds, funds, and portfolio building. And there's nifty quizzes at the end of each lesson where you can earn points that can be used for Morningstar products.
posted by ThePinkSuperhero
on Jan 9, 2007 -
EarthShell, a small Maryland company that makes environment-friendly packaging (among
others) may wink out of existence
thanks to PIPEs
, or private investments in public equities. Who likes PIPEs? Hedge Funds
, mostly. Companies that take the pipe
, as it were, may be sealing their doom. 10 percent of PIPE deals done this year are 'death spirals'
, where the company's stock price plummets from short selling by the financiers who structured the deal in the first place. And of course it's legal if you don't
get caught shorting the stock naked and covering with the shares from the PIPE.
(BTW, http://www.earthshell.com appears to be on the margins now or I'd have linked it).
posted by nj_subgenius
on Dec 27, 2006 -
One man's retirement math: Social Security wins
At the heart of President Bush's plan to sell Social Security private accounts is a simple notion: You're always better off investing your retirement money than letting the government do it.
By doing it yourself, you can stow some money in the stock market, and over the long run will get a better return on that investment than today's Social Security system offers.
The idea is broadly accepted. That's why the administration's plan to partially privatize the system sounds appealing to many. But that better return won't always happen.
Just ask Stanley Logue of San Diego.
For 45 years, the defense-industry analyst paid into the system until his retirement in 1994. But with all the recent hoopla over reform, Mr. Logue, a Massachusetts Institute of Technology graduate, decided to go back and check his own records. Would he have done better investing his money than the bureaucrats at the Social Security Administration?
posted by Postroad
on Dec 27, 2004 -
Another "Google heading for an IPO" report
- but this time it's for real, according to the Financial Times. Apparently the shares will be sold through an electronic auction "designed to prevent a recurrence of the sort of financial scandals that have engulfed Wall Street since the collapse of the dotcom bubble". Not that Google was ever going to be Enron.
posted by zimbobzim
on Oct 23, 2003 -
Remembering the crazy dot-com boom.
In November of 1998, a small California Internet provider named AvTel Communications announced they were providing local ADSL service to the community via a typical (and innocent, at least so it was thought) corporate press release. Business wires
completely mis-interpret the release, CNBC talks about it on air, then clueless investors hoping to get rich quick start throwing money at the stock causing the stock price to rise an amazing 1284% in one day
before trading is suspended. After several class-action suits
, and a company re-name
, the company managed to survive the hoopla, but only barely. Now they're being de-listed
like yesterday's trash. Did something like this ever happen to a company for whom you worked? Let's share! (Yeah, I worked there then.)
posted by WolfDaddy
on Sep 12, 2002 -
Someone we trust says something reassuring.
Fed Chairman Alan Greenspan, arguably the most powerful man in the world, blames "infectious greed" for the recent panic-like tail-spins on Wall Street, but says that the economy is on the way to recovery. One comment held that Greenspan was finally able to let out how he feels about what's going on, without shrouding his opinion in economic jibber-jabber.
"For once he really spoke his mind. He usually tends to obfuscate things quite a bit."
But really, how many of you expected Greenspan to say anything other than "the fundamentals are in place for a return to sustained healthy growth"? Does Greenspan actually feel this way? Could it be that he is actually majorly pessimistic, but is using his soothing sweet-song voice and obvious clout and earned respect to somehow buck recent trends? Bush's speech didn't do much for our faltering economy, but will Greenspan's? Can one man's mere words possibly change the course of history? Well?
posted by Hammerikaner
on Jul 16, 2002 -
Oooh, Martha's in trouble...
Looks like her ex-boyfriend may have tipped her off to some insider information (and subsequently got popped
). News of the incident has caused Martha Stewart Omnimedia stock to drop. Not a Good Thing.
posted by shecky57
on Jun 12, 2002 -
Malcom Gladwell's got a new one in the New Yorker about a guy whose investment strategy positions him to profit from unlikely and scary random catastrophes like 9/11. Its' not on newyorker.com, but the story's subject
was kind enough to scan it and post it
posted by luser
on Apr 16, 2002 -
Fake profits are causing the stock market to descend. Could someone explain to me the meaningful difference between Enron and Amazon.com?
One company recently reported fake profits of $5 million, while having billions in debt. Enron, well...no profits either, and billions in debt. So why is Amazon.com considered "promising"? Enron had a revenue stream too.... Prediction: Amazon.com's stock will be "revalued" sharply lower as people get lucid about real profits and as the accounting/profit scandals spread.
posted by ParisParamus
on Feb 4, 2002 -
The Catch with Wells Fargo's Share Builder
Some of you may have seen Wells Fargo's ads touting $4 per transaction and unlimited transactions for $12. The main catch is that you cannot trade every day. From their FAQ- "ShareBuilder trades can be made the first, second, third or fourth Tuesday of each month. You select which day you would like your trade to take place when setting up your ShareBuilder Plan. In the event of a month with five Tuesdays, no ShareBuilder trades will take place on the fifth Tuesday."
When the rest of the world is going to real-time trading, why do you think Wells Fargo is pushing this? Do you think it is deceptive that this is not mentioned up-front?
posted by SandeepKrishnamurthy
on Dec 12, 2001 -