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‘Given the importance of economic development, … I have expanded my thinking,’ Robert A. DeLeo said. |
Casinos get boost as DeLeo signs on
Joins Patrick, Murray in push for gaming
By Matt Viser Globe Staff / September 19, 2009
House Speaker Robert A. DeLeo expressed strong support yesterday for bringing resort-style casinos to Massachusetts, one of the clearest indications yet that lawmakers are poised to expand gambling as they seek fresh revenues in a down economy.
In a separate speech yesterday morning, Senate President Therese Murray also made the case that Massachusetts should legalize casinos, asserting that they would bring hundreds of new jobs and capture money currently going to Foxwoods and Mohegan Sun in Connecticut.
The comments by DeLeo and Murray put the state’s top three political leaders on similar ground in support of resort-style casinos for the first time as the Legislature plans to begin considering a major bill as early as next month.
DeLeo has been a supporter of expanded gambling, but in the past has put an emphasis on installing slot machines at racetracks instead of building resort-style casinos complete with amenities such as hotels, shops, and golf courses.
“Given the importance of economic development, as well as the vital need for revenue, I have expanded my thinking,’’ DeLeo said in an address in Waltham to a meeting of Associated Industries of Massachusetts. “In addition to my backing of slots, I now support resort casinos.’’
At about the same time, Murray, speaking to the Plymouth Area Chamber of Commerce, said: “The reality is that hundreds of millions of dollars are going to Connecticut casinos from Massachusetts residents every year. We need to explore ways how we can capture that revenue.’’
She said building casinos would means hundreds of construction jobs, as well as permanent employment once the casinos open.
In an interview yesterday, DeLeo said House lawmakers are drafting legislation, with hearings likely to begin next month.
A debate before the full House, he said, could begin before lawmakers recess in mid-November, but seems more likely early next year.
Governor Deval Patrick’s plan to license three resort casinos was defeated last year, in large part because of opposition by House Speaker Salvatore F. DiMasi.
With DiMasi now out of office, the debate has shifted dramatically: It is no longer about whether Massachusetts will see expanded gaming, but when and in what form.
“What has interested me all along is the jobs and the revenue,’’ Patrick told reporters yesterday in the Berkshires. “And I think there is a way to do this that maximizes the jobs and revenues and minimizes – not eliminates, minimizes – the adverse impacts.’’
Still, the casino industry has struggled mightily with the economic downturn, forcing many developers to scale back projects and focus on retaining their current properties, rather than on adding new ones.
The Globe reported Sunday that Foxwoods in Connecticut, which has long been a success story in the casino industry, laid off about 6 percent of its workforce last year and saw its revenues from slot machines plunge 13 percent in July, compared with the previous year.
Nonetheless, DeLeo cast the plan yesterday as a ministimulus package for Massachusetts, one he said would bring in new revenues and create jobs as the state seeks to recover economically.
“I’m still trying to formulate my ideas, but I’m hoping this will not just be a gaming bill, but also an economic development one,’’ DeLeo said in the interview.
“I’m just really concerned about the future,’’ he said. “I think the only way we’re going to get out of this economy is jobs, jobs, and more jobs.’’
He also said that lagging state revenues are an incentive to find a new source of money.
That argument may have more urgency after Patrick announced yesterday that he expects to make further spending cuts this year because of falling revenues.
“I don’t see an appetite for new taxes, and we don’t have much left in the rainy day fund,’’ DeLeo said. “We need to bring in new revenue.’’
He also argued that slot machines could be installed quickly at the racetracks, bringing in new revenues, while giving casino companies more time to build resort casinos, which would create new construction jobs.
DeLeo said one option that may be considered involves the licensing of two casinos, one in Eastern Massachusetts, one in Western Massachusetts, and then allowing slots at Plainridge and Raynham Park racetracks.
But when asked about installing slots at racetracks, Murray said she is “not hot on that, but I’m going to listen.’’
“That’s fast money,’’ she said in an interview. “But is it sustainable?’’
She cited Twin River in Rhode Island, which relies on slots and filed for bankruptcy in June.
She said several senators have been working on different proposals over the summer, but added that it will take time to put together the regulatory framework that would allow casino developers to begin building.
“It’s really a three-year process,’’ she said. “If we’re going to do it, we need to start.’’
Many specifics have to be worked out, including how many casinos would be licensed, whether there would be any preference given to a Native American tribe, and how potential developers would secure the rights to build.
Casino developers have been closely monitoring the gambling debate in Massachusetts and have scoured the state for land and partnerships.
Mohegan Sun in Connecticut has been laying the groundwork to build a casino in Palmer, a small community near Springfield. Several developers have looked at land in neighboring Warren.
Suffolk Downs in East Boston has been jockeying for the past two years, securing key political backing and trying to ensure that it has the inside track on a Boston-area casino. Wonderland Greyhound Park in Revere has joined with Suffolk Downs to compete for one casino license.
One potential wrinkle is the Mashpee Wampanoag Tribe, whose attempt to use its federal rights to open a casino in Middleborough has been derailed by a US Supreme Court ruling.
There are several other developers who have hired lobbyists and expressed interest in Massachusetts previously, but have not announced specific plans.
Andrea Estes of the Globe staff contributed to this report. Matt Viser can be reached at maviser@globe.com.
The 25 Most Powerful Women In Banking
There’s been a lot to mull over this year about gender equality in finance and business.
One recent survey by Catalyst, a nonprofit group that promotes women in business, found that 19% of women have lost their jobs in the past two year, compared with 6% of men. Then, there was Jack Welch’s comment a few months ago that women who take time off for their family are doomed to been passed over for high power jobs.
- JP Morgan’s
- Heidi Miller, No. 1 Woman Banker
Other studies are more upbeat. The Boston Consulting Group says women will drive the post recession economy because of rising female employment and because women are narrowing the wage gap with men.
Now US Banker magazine is finding some bright spots in its annual “25 Most Powerful Women in Banking” issue. Calpers, the giant California pension fund, hired the first female CEO, Anne Stausboll, in its 77 year-history, while Bank of America is said to be grooming Sallie Krawchek, who was recently hired as head of the bank’s Global Wealth and Investment Management unit, as a possible successor to CEO Ken Lewis.
At the top of the US Banker list, for the third straight year, is Heidi Miller, J.P. Morgan’s CEO of Treasury and Securities Services. One notable newcomer to the list is BBVA Compass retail chief Shelaghmichael Brown, who helped with that bank’s recent acquisitions in the US.
The magazine editors rank the women based criteria such as one-year performance, the results of business initiatives, management style and overall influence.
Here’s the full list, and for more rankings click here.
The 25 Most Powerful Women in Banking 2009
1) Heidi Miller, JPMorgan Chase & Co.
2) Karen Peetz, BNY Mellon
3) Pamela Joseph, U.S. Bancorp
4) Barbara Desoer, Bank of America
5) Carrie Tolstedt, Wells Fargo
6) Peyton Patterson, NewAlliance Bancshares
7) Deanna Oppenheimer, Barclays PLC
Mary Callahan Erdoes, JPMorgan Chase
9) Diane Thormodsgard, U.S. Bancorp
10) Julie Monaco, Citigroup
11) Lynn Pike, Capital One Bank
12) Cara Heiden, Wells Fargo
13) Avid Modjtabai, Wells Fargo
14) Donna Demaio, MetLife Bank
15) Mollie Hale Carter, Sunflower Bank
16) Diane D’Erasmo, HSBC USA
17) Ellen Alemany, Citizens Financial Group and RBS Americas
18) Anne Arvia, Nationwide Bank
19) Anne Finucane, Bank of America
20) Ellen Costello, Harris Bankcorp
21) Colleen Johnston, TD Bank Financial Group
22) Shelaghmichael Brown, BBVA Compass
23) Diane Reyes, Citigroup
24) Kay Hoveland, K-Fed Bancorp & Kaiser Federal Bank
25) Leeanne Linderman, Zions First National Bank
Consumer confidence soars
Sentiment reading increased to 54.1 in August, well above economists’ expectations.
By Julianne Pepitone, CNNMoney.com staff writer
NEW YORK (CNNMoney.com) — A key measure of consumer confidence jumped much more than predicted in August, as the job market outlook and business expectations improved, said a report released Tuesday.
The Conference Board, a New York-based business research group, said Tuesday that its Consumer Confidence Index rose to 54.1 in August from an upwardly-revised 47.4 in July.
Economists were expecting the index to increase to 48, according to a Briefing.com consensus survey. The measure is closely watched because consumer spending makes up two-thirds of the nation’s economic activity.
The index posted declines in June and July, but the reading “appears to be back on the mend,” said Lynn Franco, a director at The Conference Board, in a prepared statement.
“Consumers were more upbeat in their short-term outlook for both the economy and the job market in August,” Franco added. But the reading for income expectations rose only slightly.
Despite August’s increase, the index remains at historically low levels. An overall reading above 90 indicates the economy is solid, and 100 or above signals strong growth.
The report is based on a survey mailed to a representative sample of 5,000 U.S. households. The questionnaire asks whether respondents think current business conditions are good, bad or normal, about employment conditions, as well as if they expect employment or income levels to improve or deteriorate over the next six months.
Job market outlook. The percentage of respondents expecting more jobs in the next six months rose to 18.4% from 15.5%.
Similarly, those saying jobs are “hard to get” slipped to 45.1% from 48.5% in August, while responses that jobs are “plentiful” ticked up to 4.2% from 3.7%.
Earlier this month the Labor Department reported that 247,000 jobs were lost in July and the unemployment rate fell to 9.4% from 9.5% in June — the first decline in more than a year.
According to government figures, 237,000 fewer people were unemployed last month. That decline could be due to discouraged job seekers who have stopped looking, people who have now retired, or those have gone back to school. But the rate does include people who have exhausted their unemployment benefits or do not collect them.
Income expectations. Consumers were only slightly more positive in their income expectations, Franco noted. Those expecting an increase in their incomes jumped to 10.6% from 10.1%.
“As long as earnings continue to weigh heavily on consumers’ minds, spending is likely to remain constrained,” Franco said.
Business conditions. Consumers anticipating business conditions to improve over the next six months increased to 22.4% from 18.4% in July, the report said.
Conversely, respondents expecting conditions to worsen in the months ahead slipped to 15.8% from 19%. 
Find this article at:
http://money.cnn.com/2009/08/25/news/economy/consumer_confidence_august/index.htm
The Martha’s Vineyard Times
Mass in top 10 for stimulus spending
By Kyle Cheney
Published: August 13, 2009
STATE HOUSE, BOSTON, AUG. 13, 2009…..The state, local governments and private entities in Massachusetts have received $4.44 billion and spent more than $2.02 billion, 45 percent, through the federal stimulus law, known as the American Recovery and Reinvestment Act.
That percentage of spending puts Massachusetts seventh among states in the rate of putting stimulus funds into the economy, Executive Office of Administration and Finance officials said Thursday. By the end of the life of the stimulus in fiscal 2011, the state expects to receive $9.22 billion for spending out of $514 billion doled out nationally, as well as $4.28 billion in tax benefits, compared to $272.52 billion nationally.
Testifying Thursday before the Legislature’s Committee on Federal Stimulus Oversight, budget officials said the federal funds had helped save budgets for important social welfare programs, spark infrastructure development and retain jobs. But “evolving” federal guidance has made it difficult to track the number of jobs created, they said.
Much of the funding has been used in the state budget, effectively preserving jobs that may have been cut.
Secretary of Administration and Finance Leslie Kirwan said stimulus spending was one facet of the Patrick administration’s effort to turn around the Massachusetts economy, which has seen tens of thousands of job losses and deteriorating tax collections in recent months. Other aspects include the state’s borrowing program, an accelerated bridge repair program, as well as investments in broadband, clean energy and life sciences.
Of the $2.02 billion in stimulus funds spent, state agencies are responsible for $1.47 billion, including $419 million for education, $1.02 billion for safety net programs, $12.4 million for public safety efforts, $8.1 million for labor and workforce development programs and $4.5 million for transportation programs. The rest flows directly into cities and towns, school districts and non-governmental entities.
Spending deadlines for hundreds of millions of dollars of transportation infrastructure funds have been met and exceeded, said Jeffrey Simon, director of the Patrick administration’s Office of Infrastructure Investment, which oversees much of the stimulus spending. Those deadlines included a 120-day window to spend $153 million on highway repairs – Massachusetts spent $191 million – and a 180-day timeframe to spend $159 million on transit – the state has spent $164 million as of two weeks ago – Simon said. If those deadlines had not been met, the state would have had to return the money to the federal government.
Administration officials said they were struggling to quantify the number of jobs created by ARRA funds because of “evolving” guidance for how to calculate job gains and job retention.
“We’re on version three now of directives from [the federal Office of Management and Budget],” Simon said. Simon pointed to an October 10 deadline for reporting such numbers, when the state hopes to have clearer guidance.
Sen. Marc Pacheco, who co-chairs the stimulus oversight committee, said he expected “a good news story” when those job numbers were available.
Kirwan later said she expected the numbers to show that “most likely thousands of local jobs” had been created or retained. She, as well as committee co-chair Rep. David Linsky, said the federal funds for safety net programs – food stamps, mental health services and others – had saved lives.
Since March 19, the last time Administration and Finance officials came before the committee to discuss stimulus funding, Simon’s office has hired two veterans of Attorney General Martha Coakley’s office to help oversee infrastructure spending. The two, Stephanie LeBlanc and Douglas Rice, who respectively serve as infrastructure assessment manager and compliance and reporting manager, worked on Big Dig cost recovery efforts for Coakley. Simon said hiring officials with that experience made “a statement” about the administration’s seriousness about ensuring that public dollars are spent wisely.
Kirwan told committee members the administration had hoped to evenly spread its stimulus funds through fiscal years 2009, 2010 and 2011, but steep deterioration in revenue collections moved state policymakers to frontload much of the stimulus spending to help balance the fiscal 2009 budget.
“When the governor first put this budget together for fiscal ’10, we had not yet experienced the revenue losses for April and June,” she said, noting that those two months saw revenues miss benchmarks by $500 million and $180 million, respectively. “At this time last year, we still had not lost a dollar of revenue. We did not until the middle of September last year have any loss of revenue.”
Comptroller Martin Benison also testified at the hearing, describing his office’s efforts to track and report on 34 separate grant awards overseen by OMB. Twenty departments – 16 executive agencies, two non-executive departments and two colleges – are responsible for administering those grants, which have totaled more than $500 million to date. Much of that includes a $412 million use of education funds to offset a fiscal 2009 local aid reduction.
Benison said his office holds weekly conference calls with stimulus stakeholders to coordinate reporting efforts.
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http://www.mvtimes.com/marthas-vineyard/news/latest.php?id=151
Innovative finance strategies for startups
Lawrence Gennari, partner at Choate, Hall & Stewart, LLP
With the stock market entering a modest equilibrium, many emerging growth companies, whether venture-backed or privately funded, are reconsidering financing strategies and looking at their next steps.
Yet, bank financing remains elusive, and many venture capitalists, particularly those previously funding Series A and B rounds, seem to be focused on stabilizing their existing portfolio companies or investing in later stage enterprises. So what’s a technology company to do if it needs financing and hopes to be sold or go public within two years? Consider the following:
Doing more with less. Financings are still getting done, even in this environment. The key is adjusting financing strategy to what is available — and from whom — in the near term. For example, a planned venture round for $7 million may need to be scaled back to a $3 million targeted angel investor offering. Angel investors, both in groups and as individuals, still are reviewing business plans from local companies in compelling industries or with demonstrable near-term financial success, such as achievement of break-even cash flow. Any management team that is formulating plans and presentations for institutional investors should have a parallel plan to reach out to angels.
Milestones matter. Whether the target investor is large or smaller, the questions will be the same. How have you spent existing cash, and how will you apply proceeds from the new financing? Be prepared to demonstrate how past investment led to objective milestones, such as a new upgrade or version of software, registration of unique users, or achievement (or near achievement) of break-even cash flow. For any new offering, you’ll need to show cash outlays that are real, achievable and narrowly tailored to meet near-term milestones. Remember, even if you can’t raise all of the money you ultimately need right now, you’ll position the company for a greater financing valuation later — perhaps in a better or more hospitable economic environment — if you can execute on meaningful milestones this year.
Consider the audience. No financing is “typical” or “standard,” and today, more than ever, investment documents must fit investor objectives. If valuation is stalling discussions, would the investor take convertible debt with a right to participate in future equity rounds at a discount? If future upside protection is the issue, would investors be satisfied with preferred shares carrying an agreed-upon liquidation preference on any future sale? Flexibility and fitting documents to meet stated investor needs is critical — do not draft or present “standard” documents at initial meetings. Angel investor groups will have their own term sheets and documents, while individual angel investors will rely on the company to generate documents later to fit specific discussion points.
Don’t wait to approach investors. How does a promising company with customers, revenue and real prospects find investors, and are any angels still writing checks? The answer is “yes.” Granted, angel investments overall fell in 2008 compared with the year before. Yet the number of deals was relatively unchanged, with 55,480 startup companies raising angel capital, according to the Center for Venture Research at the University of New Hampshire. Most angel investor groups have websites and will respond to online inquiries. The best approach, however, is to approach groups or individual investors through an introduction from someone they trust, which includes fellow investors, an accountant, a lawyer or a banker. The party providing the introduction also might prove to be an important source of information regarding the investor’s preferences, investment appetite and co-investing circle of friends.
Bottom line. Whatever financing strategy you choose, be prepared to think, resize and readjust creatively based on today’s market realities. An innovative and flexible approach is key to raising money now — and for the foreseeable future.
Lawrence Gennari is a partner in the business and technology group at Choate, Hall & Stewart, LLP and an adjunct professor at Boston College Law School. He can be reached at lgennari@choate.com.
Posted by: tplatt@p… / Friday, July 17th, 2009 – 8:36 am EDT
We agree with much of Attorney Gennari’s advice on how to prepare for your pitch to a venture capitalist or other private investors. For bandwidth-constrained founders, they are most concerned with the efficacy of finding and attracting the attention of appropriate investors. From this perspective, entrepreneurs and business execs should consider a forum specifically designed with input from the region’s leading private capital investors to offer an effective and efficient venue for identifying, screening, matching and assessing investment suitability of rapidly growing companies. Speed Venture Summit is New England’s premier event for business executives to speed pitch their growth story to private capital investors: in the course of a single day, they meet face-to-face with six different groups of the region’s leading private capital investors. For more information, please visit www.speedventuresummit.org
Financial News – Can IMF be global banker?
THINK AGAIN BY ANDREW SHENG
FLYING to Boston for a conference on the global crisis, I went into the famous Harvard Coop bookstore in Cambridge. It was like my favourite candy store, I dashed here and there, picking up books I could not get in Asia and browsed new books that I could not see from Amazon.
Sitting in Harvard amongst the teachers of my teachers, I felt humbled by the collective brain power that gathered there. After all, the former Harvard president is now chief economic adviser to the US President and running the show to rescue the US economy.
There was one consensus – without the US economy recovering, it would be difficult to see a global recovery, but probably, the Chinese economy may be the first to recover.
Let me explain the role of the IMF (International Monetary Fund). Most people don’t understand the idea of the SDR (special drawing rights) and what the IMF does.
In Asia, the IMF is famously remembered for its role in trying to solve the Asian crisis, but many remembered the initials stood for I AM FIRED, because its recommended tough medicine initially created more deflation than easing the pain. Asian crisis countries could not print foreign exchange that they owed, whereas the West can print their own currencies and so ease the pain of crisis.
But so far, the IMF has not played a role in either providing finance nor advice to the large countries, such as the US, UK and European Union, where the banking losses are the most severe.
The IMF medicine will be given to the smaller members who unfortunately repeated the mistakes of Asia to borrow foreign currency more than they could afford.
We have to understand a bit of history to understand the IMF. The IMF and the World Bank were created in 1945 under the famous Bretton Woods Conference. There was a famous debate between the economic adviser to the US Treasury, Harry White and Lord John Maynard Keynes, the most famous economist of his generation, who wanted a global central bank and a global development fund.
In the end, the US Treasury view prevailed – the power of money creation was too important to give to a global agency; it was retained in the hands of the sovereign powers, of which the US was the dominant power after two World Wars.
The present Global Financial Structure was the direct result of Pax Americana, under which the US provided monetary stability and liquidity through the US dollar and a nuclear umbrella for global peace and security.
In exchange, countries opened up trade and investments, following the principles of free trade. Bretton Woods opened up free trade and broke the power of the British Empire to operate under a tariff barrier.
The post-war global development is the direct consequence of the Bretton Woods strategy, just as the present crisis demonstrated its inadequacies and flaws.
Can the IMF be a global central bank? The common definition of a national central bank is that it is an issuer of the national currency, responsible for monetary stability, systemic financial stability and domestic payment system and also financial adviser to the government. Based on this definition, the IMF is not an issuer of global currency, it has some role in global monetary stability, it failed to stop recent systemic financial instability and is not responsible for global payment systems.
It does surveillance work on global standards, provide advice to member countries and did give some useful warning on the recent crisis, but was ignored. So it is not the global central bank. Indeed, the IMF is not even the central bank of central banks. That is the role of the Bank for International Settlements, based in Basel, which is the secretariat for central bank discussions, the Financial Stability Forum (now Board), the Basle Committee for Banking Supervision, the International Association of Insurance Supervisors and other central bank committees.
Basically, the IMF has a balance sheet of about US$350bil (available resources of US$225bil) and a staff of 2,600, based mainly in Washington DC.
It is remarkable how the IMF almost had no lending to its members by 2007 and just laid off a lot of its experienced staff. By 2009, it was scrambling to give loans to several crisis economies and the G20 had just promised to increase its resources to US$1 trillion.
Is it enough? If you think that the IMF has just announced that Western banks probably lost US$4.2 trillion, and that global cross border banking is US$4.5 trillion, the new resources are helpful, but the task is huge.
Life cannot be easy for the deputy sheriff responsible for global financial stability, since he cannot influence the sheriff who hired him in the first place. The deputy gets blamed for the tough medicine applied to the smaller members, but he cannot apply the same medicine for the sheriff. It is not an equal world.
Don’t get me wrong. The IMF did not cause the financial crisis and can do a lot to ease the pain. It is an important provider of global public goods. But until its legitimacy and credibility is given to it by its dominant shareholders, it cannot be the global central bank, which is probably what the world really needs.
? Think Asian – Datuk Seri Panglima Andrew Sheng is adjunct professor at Universiti Malaya, Kuala Lumpur, and Tsinghua University, Beijing. He has served as adviser and chief economist to Bank Negara, deputy chief executive of the Hong Kong Monetary Authority and chairman of the Hong Kong Securities and Futures Commission.
Uneasy times for the Shapiro family
Ties to Madoff could spur effort to recover investment gains
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Ruth and Carl Shapiro, in an undated photo. (The Nourses) |
By Beth Healy and Steven Syre Globe Staff / July 6, 2009
Eleven days ago, while Bernard Madoff was in a Manhattan jail cell awaiting his 150-year sentence, his old friend Carl Shapiro was enjoying a family dinner at the Four Seasons in Boston. He and his wife, Ruth, were celebrating their 70th wedding anniversary with their children and grandchildren at the luxury hotel, where they often dine.
The festive affair belied the uneasy times for the Shapiro family. Three days before attending the party, Shapiro son-in-law Robert Jaffe was accused by federal regulators of delivering $1 billion in client funds to Madoff, reaping $150 million in improper payments in return. Jaffe denies the charges.
Shapiro, who has lost at least $545 million to Madoff, is one of numerous large investors who are under investigation by US authorities.
And now, as a client who has known Madoff for five decades, Shapiro has to worry if the court-appointed trustee recovering funds for victims will try to seize any profits he or his charitable foundation received from him over the years, as the trustee has sought to do with other large clients.
“There’s a significant risk for people who had substantial accounts for many, many years, who were looking at the supposed performance regardless of what the market was doing and seeing gains year after year,’’ said Boston attorney Harry Miller, who represents a number of Madoff victims. “The trustee is going to take the position that they should have known, and could hold them responsible for that.’’
And if regulators determine he received unusually large returns over his many years with Madoff, the consequences could be tougher still.
Irving Picard, the Madoff bankruptcy trustee, is pursuing a number of large investors for “clawbacks,’’ or demands they return profits from Madoff because the money, in effect, belonged to other investors.
He is limited to the past six years of gains; the Securities and Exchange Commission has no time limit on how far back it can go to recover what it calls “ill-gotten gains.’’
Picard and the Shapiros have not commented on whether the family has received a clawback demand.
In some ways, life continues as usual for two of the men closest to the Wall Street swindler. They have returned from Palm Beach to the Boston area for the summer, as they typically do. There was the recent wedding of the Jaffes’ son Steven, and they recently attended the bar mitzvah of the child of some friends.
But in other ways, life is changing in ways big and small. Jaffe will not be a regular at the Pine Brook Country Club in Weston this season; he’s taken a year off from the golf club “for financial reasons,’’ his spokesman said.
Meanwhile, Shapiro, 96, has been pained to see a large part of his personal fortune wiped out, along with half of the charitable foundation that has donated in his family’s name to hospitals, art museums, and schools in Greater Boston and Palm Beach. He has said he was as shocked as anyone by the scandal.
The Shapiros have donated $196 million to the Carl and Ruth Shapiro Family Foundation over the past decade, according to the foundation’s tax records filed through 2007. More than half of that, $111.5 million, was donated in 2007.
The family uses another entity to sometimes direct contributions to the foundation: Wellesley Capital Management Inc., which accounted for $49 million of the donations during the 10-year period. The firm was established in 1975 to handle tax and accounting services for the family fortune and keeps the books for the foundation, according to tax records and state filings. It is also listed as a client on Madoff customer lists.
Through a spokesman, the Shapiros declined to say if the money they gave the foundation came from Madoff or other sources.
Last week, a Shapiro family confidant who asked to remain anonymous confirmed that both the US attorney in New York and the bankruptcy trustee are examining Shapiro’s investments with Madoff.
Wellesley Capital did not have oversight of Shapiro investments, said the family spokesman, Elliot Sloane, but is a “bookkeeping and accounting office serving the needs of the Shapiro family investments.’’ It has a small staff, and its officers are Shapiro’s three daughters: Linda Waintrup, listed as president; Rhonda Zinner, and Ellen Jaffe, Robert’s wife.
On Madoff’s customer list – flawed and error-ridden though it is – no entity is mentioned more times than Wellesley Capital Management. The firm, or the address and suite number of its office, appears 129 times, with clients that include Shapiro family trusts and two of the Jaffes’ sons.
Other investors with longtime relationships with Madoff also appear multiple times on the list: Jeffrey and Barbara Picower and their foundation, which Picard has alleged took billions more in money out of Madoff accounts than they put in, show up 10 times, and New York money manager Ezra Merkin, who funneled $2.4 billion in client money to Madoff, shows up eight times. Stanley Chais, the Beverly Hills money manager charged with fraud by the Securities and Exchange Commission, is listed 68 times.
One possible explanation for the large number of Shapiro family accounts on the client list is that Carl Shapiro’s relationship with Madoff dates back to the 1960s.
People who know Shapiro said he thought of Madoff as a son. In the days before the collapse of his scheme in December, Madoff asked Shapiro for $250 million, which his friend gave him. Shapiro learned of Madoff’s confession on the television news, say people who know him.
Known for an exacting attention to detail, Shapiro has kept a firm hand in the workings of his charity and his finances, according to people who know the family. He takes a personal interest in many of the nonprofits the foundation funds. He set up Wellesley Capital rather than hire an outside firm to manage his affairs. And for years he used a New York accounting firm run by a friend of Madoff’s to prepare the foundation’s taxes, which often were filed late.
The question many are asking is this: How could Shapiro or other Madoff investors have failed to see that something was amiss when they received returns that beat the market so consistently?
Miller said part of the answer lies in human nature. “If things were really good, you might look the other way and not look into what was going on,’’ he said.
It appears the Shapiros are cutting their Madoff ties one by one. The foundation has fired the accounting firm Konigsberg Wolf & Co., the family’s spokesman said.
Neither Shapiro nor Jaffe attended Madoff’s court appearances, nor did they submit character references to the judge who sentenced Madoff.
Indeed, not a single person did so on his behalf.
Beth Healy can be reached at bhealy@globe.com. Steven Syre can be reached at syre@globe.com. 
BikeNow Inc. Seeks 2 Million
BikeNow Inc.
Headquarters: Boston
Employees: 3
Founded: 2008
Web: www.bcycle.com
E-mail: amytrus@gmail.com
Phone: 301-461-6170
The Pitch: BikeNow is seeking funding to buy and install its technology, pay its staff and market its product.
Bike Now Boston www.bcycle.com
PITCHING THE TECHNOLOGY
BikeNow’s product is an automated bicycle-share program for the Boston area, which it positions as a Zipcar Inc.-style service for bikes.
Users would swipe a card at a solar-powered station and ride off on one of the company’s bikes.
The company says it was formed in response to a city of Boston request for proposals for bike-sharing programs and is modeled on Paris’ Velib bike-share program. The startup plans to roll out 1,500 bikes at 150 locations, translating to 9,000 rides a day.
BikeNow plans to generate revenue through subscriptions, helmet sales, rental fees, sponsorships and advertising on bikes and stations.
PITCHING THE PEOPLE
Who is on the management team? Amy Trus, Jeff Dang and James Sinclair, co-founders.
Have executives been involved in a cashout prior to this venture? No.
Who is on the board of advisers? Erik Molander, entrepreneurship professor at Boston University and former director of CSX Transportation Inc.; Ben Morris, owner, Boston Pedicab Inc.; Cambridge city councilman Craig Kelley; and Mark Williams, finance professor at BU.
PITCHING THE BUSINESS
How much money is being sought? BikeNow is seeking $2 million.
What partnerships, collaborations or affiliations are already in place? The startup says it’s partnered with B-cycle LLC — which supplies its technology — Trek Bicycle Corp., health insurance company Humana Inc., and advertising agency Crispin Porter + Bogusky.
List any federal or state grants, contracts or awards received: BikeNow was a finalist in the BU $50K Business Plan Competition.
What’s the market size being pursued? BikeNow says it expects to attract about 2.4 percent of the 900,000 people living in Boston, Brookline and Cambridge — 22,000 people — and 200,000 tourists in its first year.
Who are the likely competitors, direct or indirect? BikeNow competes with corporate bike share programs, bicycle ownership, public transportation and car ownership.
Is the company profitable? No.
Regulators: Fund firm hid losses
Evergreen accused of tipping off some so they could cash out
By Todd Wallack, Globe Staff | June 9, 2009
Evergreen Mutual Funds
Federal and state regulators yesterday accused Boston-based Evergreen Investment Management Co. of overstating the value of one of its mutual funds for a 17-month period, and then secretly tipping off select clients about steep losses in the fund before disclosing them to other investors.
Evergreen agreed to pay $40 million to investors who lost money in the fund as part of its settlement with the Securities and Exchange Commission and to hire an independent compliance consultant, who will review its procedures. It is also paying a $1 million fine to Massachusetts securities officials.
The allegations center on the Ultra Short Opportunities Fund, which Evergreen marketed as a conservative investment that provided shareholders with steady income at low risk. Instead, fund managers bought riskier mortgage-backed securities, some of which plunged in value in 2007, according to the complaints.
From February 2007 to June 2008, regulators said, members of the team that managed the Ultra Short fund failed to tell the valuation committee at Evergreen about price changes and other negative news that would affect the value of the fund’s holdings, or used pricing information that turned out to be unreliable. This had the effect of inflating Ultra Short’s value by as much as 17 percent. That meant investors who sold during this period got higher prices than they should have, while those who bought paid more than they should have.
Moreover, the inflated value made Ultra Short appear to be one of the best funds in its class, the SEC said, when it should have been ranked near the bottom of its category.
Securities lawyer Jahan K. Manasseh, who represents a client who lost money in the fund, predicted more legal cases against other investment companies that had supposedly safe, conservative bond funds, but lost money by investing in risky securities.
“They were often mislabeled and referred to as bond funds,” Manasseh said.
The SEC did not name the Evergreen employees responsible for the alleged violations. Evergreen said the two managers of the Ultra Short fund at the time were Lisa Brown-Premo and Robert Rowe. Company spokeswoman Laura Fay said they no longer work at the firm. Neither could be reached for comment.
In June 2008, regulators said Evergreen quietly alerted some important clients and middlemen that the value of the fund’s mortgage-backed securities had significantly declined, giving those investors a chance to dump their shares.
“By picking and choosing to disclose negative information to some investors and not others, Evergreen gave certain shareholders an unfair advantage and left others in the dark,” David P. Bergers, director of the SEC’s Boston office, said in a statement.
Massachusetts Secretary of State William F. Galvin said Evergreen began telling key investors and financial advisers who sell its mutual funds about Ultra Short’s problems on June 12, 2008. That prompted some to yank money out the next day, before the price plunged further.
Evergreen shut the fund on June 18, with remaining investors getting $7.48 per share, 22 percent less than the shares were worth at the start of the year. Just a week earlier, before Evergreen tipped clients about the problems, the fund’s shares had traded above $9.
Galvin said the investigation continues.
Evergreen did not admit to or deny the regulators’ assertions.
“We are committed to acting in the best interest of shareholders, and continue to move forward with our primary goal of safeguarding your investments and providing the high quality investment service you expect and deserve,” it said in a statement yesterday.
Evergreen runs 76 mutual funds, with $164 billion under management as of March 31. It’s now owned by Wells Fargo & Co., which bought its previous parent, Wachovia Corp., for $15 billion in December.
Todd Wallack can be reached at twallack@globe.com.
Detroit News Online
Courtesy of The Detroit News
Saturday, June 6, 2009
Analysts: Penske could give Saturn the life that General Motors couldn’t
Robert Snell / The Detroit News
Detroit auto icon Roger Penske could succeed where General Motors Corp. failed by giving Saturn attention and resources that were inconsistently doled out after GM launched the brand in 1985.
Penske also will save huge overhead costs by concentrating on sales and distribution instead of manufacturing, industry experts said. And by returning the brand to its independent roots, Penske can establish a new Saturn and focus on selling and marketing instead of spreading resources among multiple brands, as was the case at GM.
“He’s got a good chance of making it work,” said analyst Joe Phillippi of AutoTrends Consulting Inc. in Short Hills, N.J. “He can make a good return — it’s going to depend on the vehicles he’s selling — but he’s not going to be making the kind of money that you would make as a manufacturer. The flip side is you don’t have all the costs of a manufacturing company.”
Penske faces challenges executing and integrating the brand into his company’s portfolio.
“It is occurring at a time when auto sales are at extremely low levels and the U.S. auto industry remains under stress in the current economic environment,” Moody’s Investors Service wrote in a note Friday as the ratings agency put Penske Automotive Group on review, saying its direction was uncertain. “It is also noted that Penske’s existing auto dealership business has been under pressure due to the weak macro economic environment.”
A deal to sell the Saturn brand and dealer network to Penske capped a frenzied week for bankrupt GM, which is shedding Saturn, as well as Saab, Hummer and Pontiac, in a court-ordered restructuring that will leave the automaker with four core brands: Chevrolet, Cadillac, Buick and GMC.
Penske has signed a memo of understanding to acquire Saturn and its dealer network, with a due diligence period of 60-90 days.
The deal will preserve 13,000 jobs and could close late in the third quarter, Penske told reporters Friday. Terms of the agreement were not disclosed.
The deal includes the Saturn brand, the parts operation based in Spring Hill, Tenn., and a network of about 350 dealerships.
Penske said GM will supply the Saturn Aura sedan and the Vue and Outlook SUVs on a contract basis for at least two years, after which he envisions importing vehicles. He could form a venture with Nissan Motor Co., the Japanese affiliate of Renault SA, according to a source familiar with the talks.
Automotive News, an industry trade publication, has reported that Penske plans to import vehicles made in South Korea by Renault Samsung Motors and sell them through the Saturn dealership network.
With Saturns eventually being made by foreign automakers, Penske will benefit from lower overhead and likely will offer fewer incentives and fewer variations of the same vehicle, industry experts said.
“A typical corporation’s got major, major investments in production facilities and they need to keep those things running so we’ve seen them pump out more cars than the market will bear,” said Jack R. Nerad, Kelley Blue Book’s executive editorial director and executive market analyst. “That results in the need to do incentivizing and make major fleet sales, which has a negative effect on resale values. Penske won’t be burdened by that. This is blazing a new trail that’s an exciting one. He has a very good chance.”
Ultimately, Penske wants to build Saturn vehicles in the United States.
It is unclear what will happen to the plants that assemble Saturn’s three models. The Aura is built at GM’s plant in Fairfax, Kan., while the Vue is built in Mexico. The Outlook is assembled at the Delta Township plant near Lansing, where GM is moving the production of the Chevrolet Traverse crossover SUV.
Saturn General Manager Jill Lajdziak will be offered a role in the new company, and Penske wants to offer a job to former Chrysler LLC Vice Chairman and President Tom LaSorda, a lean manufacturing expert who served as a consultant to Penske on the Saturn deal.
Penske expects to offer Saturn’s U.S. dealers a new franchise agreement and said it was a priority to determine how many Canadian dealers would be part of the new company.
Penske said he was attracted by Saturn’s strong network of dealers and pool of 3.5 million customers.
“We need to sustain that and reach out and get repeat referral business,” Penske said. “At this time in the world, to be a part of the reorganization of General Motors is a great honor for me.”
Penske is the head of Bloomfield Hills-based Penske Automotive Group Inc., which operates 310 franchises in the United States and internationally, selling 40 brands. Penske also distributes the Smart car, made by Daimler AG.
The Smart car and Saturn vehicles will be sold in separate dealerships, Penske said.
rsnell@detnews.com (313) 222-2028
Find this article at:
http://www.detnews.com/article/20090606/AUTO01/906060360/Analysts–Penske-could-give-Saturn-the-life-that-General-Motors-couldn-t
(NECN: Scot Yount, Newton, Mass.) – The man who exposed the largest Ponzi scheme in history is making a rare appearance tonight.
In the financial world he is a kind of geeky hero. Yet Harry Markopolos shuns the worldwide fame he has garnered by blowing the whistle on Bernie Madoff and the largest Ponzi scheme in the world.
Markopolos spoke at the Center For Asset Management’s annual conference at Boston College.
Markopolos and his team began their inquiry into Madoff in 1999. Markopolos was asked to try to reverse engineer Madoff’s investments, so that their Boston based firm could duplicate his results.
Markopolos-loves numbers, and it was enormously simple he says to use formulas to figure out that Madoff’s investment scheme was fraudulent. But what Markopolos found difficult–was convincing the Securities and Exchange Commission to investigate.
For nine years he kept up the quixotic fight-but the SEC wouldn’t take up the case. Now with Madoff having pleaded guilty-and thousands of investors bilked out of billions, the shy man who makes Whitman, Massachusetts his home says he still can’t sleep nights, even though he proved he wasn’t jousting at windmills.
He had done his best-even fearing for his life in the process, but it was not until the worst recession the county has seen in decades took hold–that Madoff was exposed.
Today Markopolos still shuns the cameras and fame. He testified before congress-but told legislators
He seeks to build community and turn a profit
By Jenifer B. McKim, Globe Staff | June 7, 2009
Kirk Sykes, president of the Boston-based Urban Strategy America Fund. (Aram Boghosian for The Boston Globe)
Kirk Sykes, president of the Boston-based Urban Strategy America Fund, strives to create affordable housing and economic development with a solid return to investors. His projects include Olmsted Green, the fund’s first investment and mixed-use development in Mattapan that was built from the ground up. The development started selling condominiums this fall. Sykes’s efforts are being tested during a recession that is pushing buyers and investors to the sidelines. He recently spoke with Globe reporter Jenifer B. McKim.
Considering the difficult economic times, do you wish you got into a different business?
No. For me this is the culmination of a life’s objective of transforming communities. I’m in my third career. I was an architect, I was a developer, and now I’m a fund manager. I have tried improving communities with a pencil, a brick, and a dollar. The dollar was working pretty well until we hit the current financial crisis. What it takes to be rewarding as a life’s vocation is to be able to make that difference. We are continuing to do that although it’s gotten more challenging.
How so?
When debt is less available and not available at all, it is hard to do a project or if you are doing a project, you have to put more equity into it to get a lesser return. You get to do less projects. The guidelines are much more stringent. Each project becomes a project to get it done.
What is the triple bottom line you talk about?
Make money, make a difference, and make it green, or the three “Ps” – people, planet, and profit.
Is that harder to do now?
This notion of responsible property investing, which is blending financial returns with sustainable and economic development is becoming mainstream. You have seen it with green building. Five years ago, green building was a notion that was somewhat esoteric. Now through legislation, greater social consciousness, and investment, sustainability has become more mainstream.
Do you have any new plans?
We are in the process of executing projects that are in process and awaiting opportunities that will come as the economy continues to recover.
To attract buyers to Olmsted Green, you have dropped prices twice, this time by 20 percent. How many units have you sold, and do you expect another price decrease?
This price decrease just happened, and we’ve seen a significant increase in interest over the last couple of weeks. I don’t anticipate another price drop. With the combination of the price reduction, the federal first-time home buyer tax credit, and substantially lower interest rates, we’ve started to see some yield. We have two units under agreement of 19.
What’s happening with Parcel 24, the mixed-used development slated for Chinatown?
Right now it’s on hold. Parcel 24 is permitted and entitled and waiting for the market and buyers to return.
When will the market return?
It goes up and down every few weeks. In general, I think we are starting to see the bottom. The question is how long is the flat part. I also think it’s regional. I think we are closer to recovery in our own market and in the mid-Atlantic.
What kind of fires do you put out on a day-to-day basis?
The world of real estate is challenged and requires new creativity. It’s about being smarter, learning new ways to finance projects, finding out how to stimulate these public-private partnerships.
Tighter lending regulations have added another challenge to condominium developments. How will this affect new developments in Boston?
The trend is toward urban living and conserving on energy. People are downsizing their footprints and minimizing. All those things support the idea of condominium living. Right now it’s a challenge, but I think it will come back because urban living in space-constrained markets needs this form of ownership.
What advice do you have for other developers?
As a city we have some very unique things going for us. They probably have most to do with our medical and educational environments. I’m an advocate of cities. Suburban development would be more challenging for some time to come. Developers: Be near the city. Be near transit lines. Be near our world-class institutions.
R U Twittering Boston?
Michael Hyatt, CEO of Thomas Nelson, answers this question best with his recent post:
12 Reasons You Should Start Twittering.
He blogs:
If you are wondering why in the world you should consider it, here are twelve reasons:
- It will enable you to experience social networking first-hand. One of my pet peeves is people who pontificate on new technologies but have never actually used them. This is particularly annoying—but common—among CEOs. Real users can always tell the difference. There is no substitute for personal experience.
- It will make you a better writer. Twitter only allows you to post 140 characters at a time. As a result, you are forced to be concise. In my opinion, this is one of the hallmarks of good writing. Short messages. Short paragraphs. Short sentences.
- It will help you stay connected to people you care about. This is one of the few technologies I’ve found that actually contributes to community-building. In today’s busy world, it’s difficult to keep up with others. Twitter makes it easy—and fun.
- It will help you see a new side of your friends. In an odd sort of way, Twitter “humanizes” people and provides a context for better understanding them. If you “follow me on Twitter”, for example, you’ll quickly see that I get excited, bored, frustrated, and confused—sometimes all in the same day. You’ll also learn what is important to me and what drives me crazy.
- It will introduce you to new friends. I have now met several new people via Twitter. These have contributed to my life in small but significant ways. Gail and I have even had dinner with a couple that we met via Twitter.
- It is faster than text-messaging. In a sense Twitter is a universal text messaging system. You can broadcast to all of your “followers” (i.e., people who subscribe to your Twitter feed) or send a direct message to just one. As a result, I have almost completely stopped text messaging. The only time I use it is to reply to someone who messages me outside of Twitter.
- It will make you think about your life. As you answer the question, “What am I doing?” you start to see your life through the lens of the people following you. Interestingly, it has made me more intentional and thoughtful about my life.
- It will help you keep up with what people are talking about. Via Twitter, I have learned about hot books, cool software, breaking news, and even great restaurants. Because the information is coming from real people who care enough to Twitter about it, I have found it more valuable and authentic.
- It can create traffic for your blog or Website. I have noticed a 30% uptick in my blog traffic in the last 30 days. It may be related to the fact that I have been in the news more or have been writing on more controversial posts. However, I also think it is related to the fact that I am Twittering every time I post a new blog entry. This seems to have a viral effect.
- It requires a very small investment. Twitter itself is a free service. In terms of my time, I probably invest less than 10 minutes a day. Since “tweets” (i.e., posts) are limited to 140 charters or less, you can scan them in a second or two. Writing them usually takes less than 30 seconds.
- It can help build your personal “brand.” When people hear your name, what comes to mind? What is your reputation? What is the “brand promise”? Brands are built incrementally, one interaction at a time. Twitter gives you one more way to build your brand, one tweet at a time.
- It is fun! Twitter is just plain entertaining. Following your family and friends is kind of like watching reality TV. The difference is that you know the people and actually care about them. In this sense, it is even more fun, because you know more about the people from other contexts. Don’t believe me? Give it a try.
I’m sure there are some downsides to Twitter that I am either ignoring or don’t recognize. But I would rather jump into the fray and shape the future of social networks rather than sit on the sidelines and throw stones.
Men are from Facebook, women are from Twitter?
Studies show the genders really are different online.
NEW YORK (Fortune) — For Jonathan and Michelle Opp of Chapel Hill, N.C., the Internet, like electricity and indoor plumbing, is an indispensable part of their lives. Always armed with their iPhones, they regularly check travel information and weather forecasts, and even use their devices to find answers to offbeat questions. But there are also major differences in the way the married couple use their devices and Internet connections.
Women Online - Boston Financial Guide
“Michelle probably does more functional things like shopping or paying bills. I like to spend more of my spare time reading music reviews and checking soccer scores,” says Jonathan, a marketing communications manager.
In fact gender, more so than race, ethnicity or economic status, determines how and what we peruse online. According to a recent study by eMarketer, slightly more women say they use the Internet than men. However once logged on, male Internet users tend to spend more time surfing the Web than females.
Meanwhile, in a separate report, eMarketer estimates that U.S. marketers will spend 37.2 billion dollars on online advertising by the year 2013. Clearly understanding what gets the genders ticking makes economic sense for any business buying ad space on the Web.
Internet Protocol addresses, however, don’t come in shades of pink and blue. So companies eager to reach men tend to focus ads on sports, technology and news sites. Businesses concentrating on women often center on stereotypically female-oriented sites, like parenting Web sites.
“Smart companies use behavioral targeting to try to reach their desired target demo online, but even then, they can’t tell who exactly is behind the IP addresses they are following,” says Lisa Phillips, an eMarketer senior analyst and author of the report “Men Online.”
So what, businesses may ask, is keeping the genders glued to their computer screens? For one, men are much more interested in watching online videos than women, notes Phillips.
The presumption that online images are more appealing to males should hardly come as a surprise: men have long been touted as the more visual sex. Other gender stereotypes seem to carry over to the online world as well: Women, who are often seen as caretakers of a family, tend to click on health care Web sites more frequently than men do.
However companies should be aware that not all Internet tendencies mirror offline generalizations.
“I would say for every situation where you think a trend may be confirming a stereotype, there seems to be another counterintuitive trend that might emerge as well,” says Mary Madden, a senior research specialist at the Pew Internet & American Life Project.
For example, women are often dubbed the more verbally adept sex. However they are no more likely to use online communication tools like e-mail, blogging, or social networks than men are.
And although women are sometimes pegged as more avid shoppers, men are just as keen as women to make online purchases. But their shopping behavior may differ.
“Men generally have the attitude, I’m going to go there, I’ve got to get it and get out,” says Phillips. “Females like to go online and socialize and shop around – much like going into a store.”
Furthermore, Phillips says fathers are just as voracious as mothers about finding online information to improve their children’s health or education. Like Web-savvy moms, they also tend to buy products with their families in mind.
Companies should also be wary about making generalizations on how the genders manage their finances. For years, men have been considered financial authorities in many families. But nowadays women are just as likely as men to bank online, according to the Pew Internet & American Life Project.
And though men are more likely to search the Internet for stock quotes or mortgage interest rates, Phillips says the dwindling economy has more women visiting online job sites. This is despite the fact that men have been hit harder by rising unemployment.
Meanwhile Michelle Opp, a software developer, has no problem admitting she shops online more frequently than her husband. But she insists it has nothing to do with gender.
 |
| Find this article at:
http://money.cnn.com/2009/05/20/technology/kattan_gender.fortune/index.htm |
Mortgage rates dip, remain below 5%
http://www.boston.com/business
WASHINGTON – Rates on 30-year mortgages inched downward this week, remaining below 5 percent for the 10th-consecutive week and just above record lows.
Mortgage finance giant Freddie Mac said yesterday average rates on 30-year fixed-rate mortgages dipped slightly to 4.82 percent this week, down from an average of 4.86 percent last week.
The record low of 4.78 percent was recorded on the weeks of April 2 and April 30. Freddie Mac’s survey dates to 1971.
Low rates have sparked a surge in refinancing activity. The Mortgage Bankers Association said its index of application volume climbed 2.3 percent last week from a week earlier.
Applications to refinance existing loans made up nearly 75 percent of all applications.
To revive the economy, the Federal Reserve has cut its key interest rate to a record low near zero and is expected to hold it there well into next year.
The Fed at its meeting in March launched a $1.2 trillion economic revival effort. It agreed to starting buying up to $300 billion worth of government debt over the next six months and to boost purchases of mortgage securities and debt from Fannie Mae and Freddie Mac.
At the April meeting, some Fed policy makers said additional purchases “might well be warranted at some point to spur a more rapid pace of recovery,” according to documents released Wednesday.
Qualifying for a loan, however, is still tough. Lenders have tightened their standards dramatically over the past year.
The average rate on a 15-year fixed-rate mortgage fell to 4.5 percent this week from 4.52 percent last week, according to Freddie Mac.
Facebook raises $150 million more to cash out employees
Matt Marshall | May 16th, 2009
Facebook
Facebook has almost finished raising $150 million in capital, in an extraordinary move by the company to buy out shares of hundreds of regular employees.
Hundreds of the Palo Alto, Calif.’s employees have now toiled at the company for more than two years, and many have worked three to five years. Increasingly, some have become restless, and would like to cash in on the huge value they’ve created. Most employees were awarded several thousands of shares valued at far less than a dollar each. Now, by selling to those shares investors for a private market value of $10 each, employees can enjoy a nice windfall. According to our sources, the transaction will include the buying out of roughly 15 million common shares – thus equaling around $150 million total value.
Facebook declined comment on the financing.
The deal has not quite closed yet. But it’s another sign that large private companies like Facebook are desperately seeking ways to find “liquidity” for their employees – especially now that the IPO market remains difficult, in particular for unprofitable companies.
Because of the size of the round, Facebook’s existing investors – Accel, Greylock, Founders Fund and several others – found it a stretch to supply the full amount of capital. We’re hearing the final part of the deal is being sold to new Asian investors.
Speculation about Facebook raising cash has swirled for several months, but most reports have misunderstood the reason why Facebook wanted to do so. Some outsiders claim the social networking company needs the cash to cover high storage and server costs, now that more than 200 million users are sharing photos at an increasing rate. But the company has constantly rejected such arguments, and now our sources are corroborating that.
The company declined to comment specifically on the fundraising, or the amount. Spokesman Larry Yu confirmed the existence of a Facebook common stock sale program, which lets employees sell up to 20 percent of their common share holdings, but he wouldn’t comment on any other details. “Facebook is a private company, so as a matter of policy, we don’t typically share details about our financial plans or comment on rumor and speculation,” he said, using a prepared statement. The company delayed the program in October, but we’re hearing the program will resume once this latest funding is finalized, which should happen very soon.
Before this, the company raised more than 400 million. It also raised debt of at least $100 million, much of that coming last year, and most of it in the form of a lease line to buy servers.
There’s no denying the company faces significant costs in covering photo-sharing costs. However, over the past six months, the company dedicated a crack team of three engineers to drive down the costs considerably. The initiative, called Haystack, replaced off-the-shelf storage products – which contained a lot of “head room” costs – with a proprietary architecture that shrunk the company’s computing costs to what really mattered. There’s also no sign the company is holding back from rolling out new high-bandwidth initiatives. It’s about to roll out a new live video chat feature, according to a report by AllFacebook (Update: We’ve since heard from another source that, while this is video chat feature in testing, there are no current plans to launch it).
Yu said speculation last last year by TechCrunch about Facebook’s server costs were an “order of magnitude wrong:” He added: “There’s a perception that our costs are skyrocketing…But those costs are not as nearly as radical as people are beginning to report.” He said that if nothing were to change at all, the company is on a “clear path to be cash-flow positive in 2010.” This is possible given Facebook’s cash in the bank, its managing of infrastructure costs and growth of its business, he said.
The company has repeated several times that it doesn’t need cash. Last month, the company’s COO Sheryl Sandberg told Bloomberg: We could not be doing better financially … We might take money-but it doesn’t mean we need to.”
The buyout of employee shares in this latest transaction should be distinguished from the separate process of “secondary market” transactions, in which former Facebook employees sell their shares to accredited investors. Those transactions are commonplace. Until now, however, Facebook has asked its current employees to refrain from such sales.
Independent Broker/Dealers – Investors Capital
NEWS RELEASE
Contact:
Robert Foney, Director of Public Relations
781.477.4814
rfoney@investorscapital.com
www.investorscapital.com
Investors Capital Corporation top independent broker/dealer according to Google rankings
Company credits recent SEO project
Lynnfield, Mass. (May 1, 2009) – Investors Capital Corporation (ICC), the premier independent broker/dealer of Investors Capital Holdings, Ltd. (AMEX: ICH), is tops when it comes to Google. Search engine results for the search phrase “top independent broker dealers” and numerous others phrases rank Investors Capital Corporation in the top broker/dealer spot due to the firm’s recent focus on Search Engine Optimization (SEO). SEO is the process of improving the volume and quality of website traffic via organic (“natural”) search results.
“I’m extremely pleased with our in-house SEO initiative,” said Robert H. Foney, Director of Marketing and Public Relations for Investors Capital.
The company has already seen an increase of over 100% in website leads since undertaking the project in late-February. ICC has also seen a marked increase in the quality of those leads.
“We’re working on a $2 million advisor who recently came through our website,” said Mr. Foney. “Both wirehouse and independent advisors are coming to our site via Google, warming to our value proposition, and submitting an online form to join. SEO has done wonders for our brand.”
The Investors Capital SEO project has yielded more motivated prospects and improved the company’s brand identity by being at the top of the search results, which, in turn, yields more qualified prospects. The firm is considering making SEO available to its advisors.
“As a top independent broker/dealer, we believe we should be in the top spot,” said Foney. “It’s only natural.”
About Investors Capital Holdings, Ltd.:
Investors Capital Holdings, Ltd. (AMEX:ICH) of Lynnfield, Massachusetts is a diversified financial services holding company that operates primarily through its independent broker/dealer and investment advisor subsidiary, Investors Capital Corporation.
Our mission is to provide premier, concierge-level service and support to our valued registered representatives, including advisory programs, strategic practice management and marketing services, and technology, to help them grow their businesses and exceed their clients’ expectations.
Business units include Investors Capital Corporation, Investors Capital Advisory Services, ICC Insurance Agency, Inc., and Investors Capital Holdings Securities Corporation. For more information, please call (800) 949-1422 x4814 or visit www.investorscapital.com.
*************************************************
Investors Capital
Independent broker/dealer
Definition of Financial Term:
Any individual or firm in the business of buying and selling securities for itself and others.
Broker/dealers must register with the SEC. When acting as a broker, a broker/dealer executes orders on behalf of his/her client.
When acting as a dealer, a broker/dealer executes trades for his/her firm’s own account.
Securities bought for the firm’s own account may be sold to clients or other firms, or become a part of the firm’s holdings.
