Tag Archives: Jumpstart Our Business Startups Act

Penny Pricing for U.S. Stocks Said to Get Scrutinized for Harm

According to Bloomberg,

Securities executives are trying to determine if the 12-year-old decision to narrow the price increments for American stock trading has harmed investors, according to two people with knowledge of the matter.

Representatives from exchanges, brokers, mutual funds and regulatory agencies held two conference calls today to discuss concerns about market structure, said the people, who requested anonymity because the discussions were private. One topic was the U.S. mandate in 2001 to trade equities in pennies rather than eighths or sixteenths of a dollar, they said.

Compressing what traders call tick sizes reduced profits for human market makers and helped drive the ascent of high-frequency traders, which now account for about half of U.S. volume, according to data compiled by Tabb Group LLC. Widening price increments for smaller companies to a five or ten cents could spur trading and prompt more initial public offerings, according to U.S. Representative Sean Duffy, who has sponsored legislation to test such a shift.

“There are a couple of groups that are really driving this and want it to happen, and it seems like everybody else may not be convinced it’ll make a huge difference but feels it should be tried because it probably won’t hurt anything,” said Justin Schack, partner and managing director for market structure analysis at Rosenblatt Securities Inc. He declined to comment on the ICI meetings.

Third Meeting

Today’s talks were the third hosted in 2013 by the Investment Company Institute, a trade group whose members manage $16 trillion, according to two people with knowledge of the matter. This year’s participants have included senior officials from the New York Stock Exchange and Nasdaq Stock Market, mutual fund companies Fidelity Investments and T. Rowe Price Group Inc., broker-dealer Morgan Stanley, and the Securities and Exchange Commission, among others, according to one of the people.

Representatives of those firms declined to comment on the meetings.

Supporters of larger price increments for some stocks argue that it would encourage more volume for small companies by making trades more profitable for market makers.

The Jumpstart Our Business Startups Act, signed into law last year, instructed the SEC to study the impact of penny pricing and mandate a new minimum increment of less than 10 cents for “emerging growth companies” if the regulator found that was warranted.

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Twitter’s IPO May Value It at $11.1 Billion

Source: Bloomberg News

Source: Bloomberg News

According to The Wall Street Journal, Twitter Inc. on Thursday said it would price its shares at $17 to $20 in an initial public offering, valuing the messaging service at up to $11.1 billion, a number seen as conservative even for a company facing widening losses.

The proposed market value would makeTwitter worth nearly twice as much asGroupon Inc., GRPN +3.11% the daily deals company, but less than one-tenth of social-networking rival Facebook Inc.

As proposed, Twitter’s IPO could raise as much as $1.6 billion for the company, whose service has grown to more than 230 million monthly active users since the first “tweet” was sent in 2006.

Analysts said the company might yet raise the target price. If the offering is well received, it could signal that investors are willing to wager on a big future for social-media companies even in the absence of profits, which Twitter doesn’t have. The deal comes amid the best year for U.S.-listed IPOs since 2007 based on number of deals.

With a price range established, Twitter can now begin to pitch investors who would have access to the starting IPO price. The company is expected to settle on a final price on Nov. 6, according to a marketing document reviewed by The Wall Street Journal. Twitter shares would then begin trading the next day on the New York Stock Exchange NYX -0.12% under the symbol TWTR.

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WHO’S AFRAID OF HEDGE-FUND ADVERTISING?

WHO’S AFRAID OF HEDGE-FUND ADVERTISING?

In April, 2012, President Barack Obama signed into law the Jumpstart Our Business Startups (JOBS) Act, which makes it far easier for companies to market their securities to investors. Next month, rules mandated by the JOBS Act and adopted in July by the Securities and Exchange Commission will go into effect that loosen the decades-old prohibitions on general solicitation efforts such as cold calling, mass mailing, and running certain commercials. The rules won’t only apply to, say, start-up tech companies. They’ll also apply to hedge funds, private-equity funds, and other alternative investment funds.

Will we soon see full-page advertisements for hedge funds in the TimesGQ, or Sports Illustrated? Maybe there will be smiling children and a line like “Invest in Cerberus: Your Future and Your Family.” Will they run commercials during the Super Bowl or the Sunday-morning talk shows? What about mass mailings to everyone in the tri-state area who bought a Mercedes-Benz or a Rolex last year? It’s all possible now.

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SEC Votes to Ease 80-Year-Old Ban on Private-Investment Ads

SEC Votes to Ease 80-Year-Old Ban on Private-Investment Ads

Hedge funds and other companies seeking private investments will be allowed to advertise publicly for funding under a rule approved today by the U.S. Securities and Exchange Commission.

The rule, which passed by a 4-1 vote, is the first one mandated by last year’s Jumpstart Our Business Startups Act to be completed by the SEC. A deadline for the regulation set by Congress lapsed more than a year ago.

The rule will ease 80-year-old advertising restrictions intended to help ensure small investors aren’t lured into taking inappropriate risks. Under the measure, startups and other small companies would also be able to use advertising to raise unlimited amounts of money.

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