Markets

Forum Fuels Ideas, Offers Little on JOBS Act Timing

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With few exceptions, the Securities and Exchange Commission’s annual Government-Business Forum on Small Business Capital Formation has been an exercise in futility over the last several years: Participants typically recommend promising reforms to facilitate small company finance, but year after year the suggestions go nowhere. This year, however, the 31st rendition of the meeting on Thursday centered not on mere proposals but on The JOBS Act, the bipartisan piece of legislation geared toward loosening regulations on small companies and making it easier for them raise capital. Yet in one sense the forum produced the same ineffective vibe as it had in past years. JOBS Act topics discussed – including crowdfunding, Regulation A reform and the removal of the ban on general solicitation in Rule 506 offerings – are in limbo and are likely to remain in that state for some time. Commission staff gave no indication as to when it would release rules to implement the provisions, which in April were signed into law.

Legal
Skowron

Morgan Stanley Adds Chapter to FrontPoint Saga

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Joseph "Chip" Skowron is in prison for allegedly engaging in insider trading while he managed funds for Morgan Stanley's FrontPoint Partners, but Morgan still has plans for Skowron. Morgan paid $33 million last year to settle a Securities and Exchange Commission suit against Skowron, who also received a five year prison sentence for insider trading in shares of Human Genome Sciences (HGSI) in 2008. Morgan still wants to recover over $32 million from Skowron. Funds managed by FrontPoint invested in 19 PIPEs and 90 Rule 144A offerings that raised over $400 million according to PlacementTracker data. Morgan acquired FrontPoint in 2006 for $404 million according to reports in the media.

Markets
Citadel Group

Citadel Group’s Securities Unit Sees Big ATM Opportunity

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Amid the growing appeal of at-the-market offerings for issuers, placement agents are searching for ways to differentiate themselves from one another to land clients. Officials at one relative newcomer in the group, Citadel Securities, believe that they have the formula to become the dominant ATM agent in the market. A division of Ken Griffin’s $12.5 billion Chicago-based Citadel Group hedge fund and asset management firm, Citadel Securities was launched in 2004, and it now is involved in about one of eight equity trades and one in five equity-related option trades in the U.S.

The firm has built that performance using proprietary trading technologies to enhance liquidity and execution, including its Mercury, Mercury Dark and Market Access algorithms. It is those services that can provide ATM issuers with a stealthy way to get into the market and raise a meaningful amount of capital quickly to minimize the impact on price, said Jon Biele, a managing director of Citadel Securities. The fact that Citadel Securities tends to be a top trader in most stocks also should work to its advantage, suggested Biele, who joined the firm in 2010. “This is a business we’re building,” he said.

Markets

SEC Small Biz Capital Forum Session Airs S-3 Eligibility Concerns

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The Securities and Exchange Commission's annual "Government-Business Forum on Small Business Capital Formation" on Nov. 15 included a breakout group on securities regulation for smaller reporting companies (SRCs). Session panelists addressed matters concerning new emerging growth companies seeking to raise capital in an environment with diminished support from the venture capital, PIPE and reverse merger communities. The panel was moderated by Greenberg Traurig partner Spencer Feldman, and contributors included Richardson Patel partner and reverse merger expert David Feldman. An overriding concern was the scarcity of capital for SRCs.