All posts by MarketsMuse Curator

elon musk self immolation nft artwork

Elon Musk Plans Self-Immolation to Create NFT Artwork; Pre-Auction Bids of $5bil

From the Believe It or Nuts Department: Elon Musk, aka Technoking of Tesla and SpaceX boss, has tweeted that he will create an NFT Digital Video Artwork that showcases his self-immolation. Tesla CFO Zack Kirhorn, who just changed his corporate title to Master of Coin, will wrap the video with an NFT (non-fungible token) for Dogecoin (CRYPTO:DOGE).

Entrepreneur Mark Cuban tweeted that he is already weighing an opening bid of $5bil dogecoin to become the proud owner of Musk’s digital art. Not to be outdone, Social Capital founder Chamath Palihapitiya, aka The SPAC King, has already dismissed Cuban’s plan and has filed an S-1 for a $50bil Special Purpose Acquisition Company that will focus on rolling up NFT Art. A source at Palihapitiya’s Social Capital, who is not authorized to comment on securities filings, said “NFTART Acquisition Corp. will be the biggest SPAC biggest ever, and it will be the planet’s most valuable stock when you consider the underlying assets we will acquire, including the Musk self-immolation piece.”

Musk Says “We’re Burning Down The House”

According to sources, cryptocurrency exchange Crypto.com has pushed its plan to create an NFT marketplace for top artists and will launch Friday Mar 19 in order to be the primary auction platform for Elon Musk’s “greatest piece of work ever”.

Once an obscure part of blockchain technology, NFTs have boomed in recent months thanks to the embrace of almost all corners of the art, entertainment, and media worlds. 

In case you’ve been asleep for the past weeks, Wikipedia explains that non-fungible token (NFT) is a digital file whose unique identity and ownership are verified on a blockchain (a digital ledger).[1][2] NFTs are not mutually interchangeable (see fungibility). NFTs are commonly created by uploading files, such as digital artwork, to an auction market. This creates an entry on the blockchain’s digital ledger which includes a reference to the cryptographic hash of the digital file which the NFT represents. The tokens can then be bought with cryptocurrency and resold.

Pre-IPO Crypto Futures Options for the April 1 $60bil strike price for Social Capital’s SPAC are already trading at $10mil per contract.

Are you following former hedge fund trader Larry Benedict’s daily $SPX trading ideas? “Go Home Flat 201”

Trade along with the trades Larry is making.

Thomas Petterfy, founder and Chairman of online brokerage Interactive Brokers said, “If people want to trade it, we will list it, although margin requirements will be set at 500x the typical margin needed, just like we do for options in GME.” Interactive Brokers is also increasing its referral fee from $200 to $2,000 for customers who refer new accounts to the Professional’s Gateway to the World’s Markets.

If you are looking for a crazy but very true story from the crypto crime division, this exclusive coverage will really set your hair on fire!

If you’ve got a hot insider tip, a bright idea, or if you’d like to get visibility for your brand through MarketsMuse via subliminal content marketing, advertorial, blatant shout-out, spotlight article, news release etc., please reach out to our Senior Editor via cmo@marketsmuse.com

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Social Capital SPAC Machine Latest: $500m Blank Check Company to Roll-Up Makers of a Stupidity Vaccine!

Social Capital SPAC factory run by SPACmeister, notorious Tweeter and promoter of RedditArmy favorite stocks Chamath Palihapitiya is rumored to have filed a confidential S-1 for his latest Special Purpose Acquisition Company, (aka SPAC). The entity is to be called SIDS Acquisition Corp. According to sources, @chamath aims to focus on “biotech companies that are creating vaccines for those who suffer from acute stupidity”. The acronym is a play on Forrest Gump’s famous line: “Stupid Is as Stupid Does”

From the “believe it or is it nuts?” news department, Palihapitiya, who is also Chairman of Spaceshot SPAC VirginGalactic has assembled a board of biotech innovators, famous billionaires, notorious disruptors, and finance industry geniuses to identify and ferret out SPAC merger candidates. From the biotech world, Theranos co-founder Elizabeth Holmes will be in charge of due diligence, Mark Cuban and Elon Musk will oversee funding strategies, and CNBC host Jim Cramer will serve as the designated head of PR, Communications and “P&D”. Famous financier Max Bialystock is slated to be the CFO for the new blank check company.

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SIDS Acquisition Corp Executive Team

According to unconfirmed sources, SIDS Acquisition has already engaged online trading platform Robinhood to include this listing in a new “private share offering module for the masses” that will offer access to buying the SIDS SPAC on a pre-IPO basis. Elon Musk is said to be overseeing a pact with soon-to-IPO “Coinbase” so that bitcoin and dogecoin can be used by the RedditArmy and others to purchase pre-IPO futures contract in the latest Social Capital SPAC.

Noted Peter Thiel, one of the sharpest early-stage investors of this generation, is said to be getting his checkbook ready for this blank check company and plans on deploying $100 million. Said a spokesperson for Thiel, “If there was ever a moment in history when there should be a vaccine for stupidity, this would be it!”

MarketsMuse Editor Caveat Emptor: Yes, the above news story is fake news and intended only to parody the current cycle of craziness, stupidity, and speculation taking place across the US equities market. What is NOT FAKE NEWS IS THIS STORY, PROFILING INVESTOR FRAUD ARTISTS FROM A FAKE COMPANY THEY CALL “SEAQUAKE”

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“Crypto-Trading Firm” Founder Andrew Katz Now Faces Felony Assault Charges

Andrew Katz aka Ross Katz aka Stark Katz, the co-founder of so-called digital asset infrastructure and crypto-currency trading firm Seaquake.io, who along with his partner Matthew J. Krueger of San Francisco are facing investor fraud charges, is now slated to appear in New York Criminal Court April 30 to answer one count of felony assault, one count of grand larceny and one count of aggravated harassment. Katz, whose bail was set at $200,000 had him posting $100,000 in cash, which sources believe to have emanated from funds that Katz and his partner Matthew J. Krueger of San Francisco hoodwinked from a Florida-based family office 18 months ago.

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Seaquake’s Matthew Krueger (L), Andrew Katz (R) http://www.seaquake.io)

The case document is via New York Court System Case CR-02020482-20NY, The victim of the assault is Katz’s now ex-wife, Selen Katz, a Turkish immigrant who appears to make her career as an Instagram bathing suit model whose daily updates can be found at www.instagram.com/seloupe

Felony Assualt Victim, Selen Katz,

Defendant Katz, who apparently still promotes himself on the firm’s website as co-founder of the so-called digital asset infrastructure company “Seaquake.io” was arrested this past November in New York and now faces 2nd Degree Felony Assault Charges (a class D felony), one count of Grand Larceny ( an E Felony) and one charge of aggravated harassment. If Katz is found guilty or if decides to plead guilty and save the court system the aggravation of having to deal with him, he could be sentenced to a minimum of 2 years in prison.

Attention “Tomas Ruso” , individual who claims to operate hijacked news aggregation blog “globalexpressmedianews.blogspot” You have scrapped original content from MarketsMuse, published on your ‘site’, and then submitted a fraudulent claim report to DMCA alleging you are the original content publisher. You have apparently done the same with multiple other original content sites and you are providing fictitious information, including name, telephone, address to DMCA within your ‘copyright infringement claims.” BTW- The address you claim as 1693 Reynolds Alley, Los Angeles does not exist. The telephone number you provided 562-279-1285 is a non-working number. The email you provided infers you are an attorney. There is only one attorney in California with the name you are using, and that attorney has stated ‘someone has clearly committed ID fraud if they are using my name!”

100% of the content on MarketsMuse is original, when we excerpt a paragraph from a third-party news site to establish sources, we always provide a link to the original article, along with complete attribution. MarketsMuse Editors

Katz and Krueger, who have been labeled “the Crypto Kleptos” and The Seaquake Slimeboys” by several people interviewed, are also said to be facing a pending list of other criminal matters, including SBA PPP bank loan fraud. Public records indicate that Mssrs. Katz and Krueger applied for a PPP loan for Seaquake OPS LLC, a Wyoming entity that Seaquake corporate presentations have identified as one of several Seaquake companies. Seaquake OPS LLC did receive a Paycheck Protection Loan of $22,813 through Wells Fargo Bank, National Association, in May, 2020.

Whether Katz or Krueger (or jointly) prepared the loan application, when listing employees, Selen Katz was identified as the company’s Creative Director (whose employment with Seaquake, according to her LinkedIn profile, started in April of 2020. According to police records in Los Angeles and New York, the current assault charge is the latest in a series of at least five prior domestic abuse arrests for Katz.

Manhattan District Attorney’s office would not provide details as to Katz’s current place of residence, yet he is suspected of squirming through an assortment of Airbnb rentals in Southern California while awaiting his April 30 court appearance, as well as New York City. In various documents, Katz also lists residences in Arvada Colorado (his mother Allyson Katz’s residence), and lists addresses in California and Florida in various bank account documents obtained by court order. According to public databases, Katz has prior assault charges, along with charges of harassment, breaking and entering, stalking throughout the past several years.

In the Florida securities and investor fraud case, in which defendants Katz and Krueger are charged with defrauding a Family Office it’s alleged that the Seaquake Slimeboys (mis) represented they were operating a start-up business and told investors that their several hundred thousand dollar investment in August 2019 was for balance-sheet purposes only and to show pending venture investors the company did have other investors and assets on the balance sheet, and a portion of the capital would be deployed to a proprietary “high-frequency trading” application for crypto currencies. Alas, there were no pending VC investors and there was no actual trading application. Katz and Krueger moved the investor funds from one bank to another and then to a Coinbase account and thereafter to crpto exchange Binance. It is easy to suspect that Katz and Krueger (a former PayPal employee fluent in cryptocurrency) have been enjoying the 6-fold increase in the price of bitcoin since the initial investor fraud took place.

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Amateur Day Traders Liberate The Markets-Making The Rich Richer

“Amateur Day Traders” by the tens of thousands who are taking tips from #reddit and #daytrading rebels, and particularly, the financial market anarchists who believe you are inflicting pain on fat cat wall street hedge fund traders by squeezing their shorts and bidding up share prices of distressed or challenged companies (e.g $GME, $AMC and others) to astronomical prices, here’s the new flash: you are all actually making the rich richer.

YOU want to “stick it to the man” (i.e. wall street and hedge funds) by taking your stimulus money and unemployment checks and take it to a gambling casino where you can bid up shares in what any 8- year old would argue are grossly overvalued stock prices. That’s fine, because you think the shares you are all buying in unison is going to create a short squeeze and hurt professional investors who have bet against obscene tulip bulb style speculation.

Notorious Shark Tank Wizard Kevin O’Leary loves you. Elon Musk is cheering you on. Even the progressive politician Representative Alexandria Ocasio-Cortez is in favor of your being able to join the new generation of day traders to compete and bet alongside Wall Street professionals, who have been playing this game for years, but you were “excluded”.

What you don’t seem to get is that while your stock and option purchases are driving up the price, every share you purchase is making “the man” billions. Private Equity lenders-who extend loans to the distressed companies on your ‘short squeeze’ target lists made those loans with their having the option to convert the company debt into shares. So, now they are converting that debt into shares and selling those shares to YOU at grossly inflated prices.

Perfect example: $AMC lender Silver Point Capital (the fat cat capitalist firm run by multi-millionaires living in mansions in Greenwich CT) and the firm that makes high interest loans to distressed companies) made $100million in two days ON TOP OF the principal amount of their loan) thanks to the financial market geniuses who are playing musical chairs. And, thanks to you folks, the movie theater chain that was next to bankruptcy last month, sold $300million in stock at share prices the company had never enjoyed in the very best of their times to YOU! Sure, when the pandemic is over, all of you are headed straight to the movie theaters so you can spend $50 for tickets and a box of popcorn and share the crowdsourcing experience with your peeps. What are you going to do with your 70 in TV screens and your streaming subscriptions? Oh, you’ll keep it all with the profits you made day trading? Sounds good

Don’t believe that your intent to cause pain to the rich wall street fat cats is backfiring a smidge? Try reading the facts.

And, the company executives who own shares in these companies are now celebrating, as this is their once in a lifetime opportunity to sell those shares to morons who have put nonsensical prices on them… once the Reddit community starts looking at insider share sale activity (when they are reported at end of the quarter), maybe you’ll scratch your heads and ask yourselves “what the f–ck” did i accomplish, other than turn millionaire executives into billionaire retirees?

Think this is nonsense? OK, Chewey.com founder and recent Board Member for GameStop made $3.6 BILLION in four days this past week–all thanks to the folks who are hoping to “stick it to the man” and other millionaire “capitalists” in some kind of “Occupy WallStreet 2.0” initiative.

Perspective: GameStop’s CEO George Sherman, who Ryan Cohen had said was “out of touch with the new movement toward e-commerce” and proceeded to buy 10% of the company at $7 in November and joined the board in effort to help them pivot), made $400mil this past week. The guy who is out of touch made $400 million in three days, thanks to the RobinHood and Reddit Day Traders Rebellion. Meanwhile, GameStop stores remain shuttered, hundreds of furloughed employees remain out of work, and video gamers are stepping up their purchases at alternative online stores-or buying direct from the manufacturers.

GameStop does not make electric cars, they don’t manufacture magic mushrooms, they are a 30 year old retail store. Ok, when the pandemic is over, one hundred million redditers are going to flock to those stores and buy new stuff. Sure you will.

On behalf of all of the fat cat private equity firms and distressed lenders who have made really big bets on distressed companies with bleak futures, you are to be thanked for making them even richer.

“Creative Designer” for Crypto Fraud Firm Seaquake.io”https://www.linkedin.com/in/selen-katz-0043821a0

Now you should get sucked into a real scam..Click on left image..Go ahead!

When the music stops (meaning when the prices of the shares you bought at wildly inflated prices) fall back inside of 10 seconds to realistic prices that make sense (based on the real value of the company; as measured by sales, profit margins, net income, and assets vs. liabilities), all of you crusading day traders who were determined to screw the establishment will inevitably lose your money in this “occupy wall street v.2.0” campaign folly.

Or, you will have unloaded your shares on the way down to another “comrade in arms” and “believer in the cause” who is as misguided as you. Ever heard of the “greater fool theory”.

Not a very altruistic thing to do to a fellow comrade in arms, but you really don’t care, do you?

Because you are not a crusader, you are not aligned with a movement, you merely want to be included in the new generation of maverick day traders and turn a quick profit so that you can invest in another fractional bitcoin.

BTW- anyone who has the notion to join a mob and storm the SEC building in Washington to protest trading halts when share prices move to extremes, you should ask your parents (or your baby sitter, or your parole officer) whether that makes any sense.

Good luck and God Bless the next generation of ‘online traders’ whose objective is to screw the establishment. Remember, GREED IS GOOD!

When you discover first hand that your behavior left you down and out, you can hope that those fat cats will have a job for you to clean their back-up swimming pool in their 3rd luxury home.

Or MarketsMuse will be happy to hire you to post to their financial industry news platform

gamestop

GameStop Stock Surge Explained

GameStop Corp (NYSE:GME) $GME share trading during the past days has, if you’ve somehow not heard, proven that an un-coordinated assembly of day traders, enabled and empowered by social media platforms Reddit and WallStreetBets can accomplish what the mob that attempted to take over the capitol in Washington DC could only dream about. Financial Market Anarchists will be the new normal.

By banding together in chat rooms, online forums and Twitter, thousands of novice gamblers have partied together and encouraged each other to buy shares and stock options in GameStop, a company that has merely 70 million shares outstanding and one that has typically reported operating losses for the past 8 quarters, including the most recent, in which the company reported a loss of $63million on $1billion in sales. Despite the anemic business results, the stock price has soared from its Jan 11 price of $20 to over $365 in after-hours trading Jan 27.

ponzi scheme gamestopHysteria? Stock Manipulation? Irrational Exuberance? Pump and Dump Scheme? Ponzi Scheme? Collusion? There are dozens of adjectives being used by the universe of long-time stock market investors, so-called Wall Street research analysts, and the many pundits appearing on CNBC. “The crazies have taken over the lunatic asylum” according to skeptics who can’t fathom the notion that GameStop, which has traded at $1billion-$2billion market throughout the past 10 years, can become a $35billion market cap inside of two days. The stock is up 3500% within the past 12 months

That said, GameStop, which has a 35 year operating history and first came public in 2002 is a Fortune 500 company. It is best known for operating a chain of 5000 retail stores that sell video game devices and other paraphernalia for video gamers is, according to some people, poised to get to the other side of the grueling hit to their business inflicted by the Covid-19 pandemic by shifting to a full-scale digital business model.

Yes, two weeks ago, the company brought on Chewy Inc (NYSE:CHWY) CEO Ryan Cohen to serve as board member. Cohen took his pet food company public 18 months ago at $35 per share and his company’s stock has soared to over $100 in recent trading.

This is good news for GameStop, we suppose. We can also suppose with 100% confidence that GameStop will exploit the current mania for its stock by selling many millions of shares at the recent inflated prices. Wall Street traders are guessing that GameStop could float 10million shares without impacting the recent price, and take in several billion dollars of cash into its treasury. They could pay down the entirety of their outstanding debt (approximately $1billion) and have several more billion to play with. In fact, the company could start to manufacture tulip bulbs and its likely they will sell billions to their old and their newest fans.

Does $2billion in cash on their balance sheet, and operating losses predicted for the next few quarters equate to an enterprise value of $30 billion? Why not? The stock market has been over-run by GenZ day traders whose only concept of investing is following the herds on social media and perhaps more important, banding together to prove the Wall Street analysts and short-sellers know nothing and deserve to be humiliated. 

Unlike down and out scammers such as crypto criminals Andrew Katz and Matt Krueger (profiled here previously), anyone who believes the SEC can stop online forums for serving as the military headquarters for what seem like bandit stock and option traders is wrong. Hell will freeze over before regulators can try to stop what is taking place in the financial markets. Get out of the way dinosaurs, if you’re a short-seller, you’ll be extinct before this party comes to an end.

PPP Loan Fraud

PFE Covid-19 Vaccine: Will Biden Now Go After SBA PPP Loan Scammers

With today’s announcement from Pfizer (NYSE:PFE) indicating they are that much closer to a Covid-19 vaccine, its time to look forward to who the Biden administration will appoint to prosecute the tens of thousands of SBA PPP loan scammers who reaped tens of billions after the Trump administration made it a simple feat to fill out a form and run with the money.

The SBA has recently published a list that contains thousands of companies that received over $150k each. Many received several million dollars. And, the SBA is scheduled to release an even more comprehensive list comprised of tens of thousands of companies that received less than $150k. The current list and the one soon to come out provides a roadmap to criminal enterprises and unsavory categories.

Propublica is making the interrogation easy for amateur sleuths.

Take for example a company known as SOSV Payroll LLC, and its interesting connection to a company profiled here last year, “Seaquake.io”, which appears to be not much more than a spiderweb of intertwined shell companies that claims to build software applications for trading cryptocurrency. Our prior reporting has led most to appreciate that if it looks like a duck, walks like a duck and quacks like a duck, it is a duck, and within the context of investor scams, Seaquake is the queen of ducks, especially when its former business development executive stated “they sell nothing but vaporware and nobody has bought it, other than investors who were deceived into buying into the company.”

SOSV Payroll is a Delaware entity with a principal office in Princeton, NJ and according to corporate filing records, is structured as a “Foreign Limited Liability Company.” The company also registered with the State of Colorado in February 2019. According to SBA PPP loan application documents filed in April 2020, they say they have 30 employees. The SBA PPP loan was approved and made via First Republic Bank for somewhere between $350k-$1million.

Of interest, this entity is a direct affiliate of Ireland-based venture fund “SOSV, The Accelerator VC”, which claims to have $700m in AUM. Soon after receiving the SBA loan, SOSV announced they made a direct investment in the above-mentioned Seaquake.io, a holding company with multiple corporate shells including in Colorado. More relevant, Seaquake has been a defendant in multiple actions, including allegations of investor fraud brought against Seaquake CFO Matthew Krueger and co-founder Andrew Ross Stark aka Ross Stark aka Stark Katz. According to criminal background searches, Katz has a lengthy history of charges ranging from breaking and entering to domestic violence to stalking.

UPDATED MARCH 2020: Add a bank loan fraud perpetrated by Katz and Krueger in connection with Seaquake OPS LLC, a Wyoming entity that is part of the web of Seaquake companies. Recently discovered, Seaquale OPS LLC did in fact apply for and did receive a Paycheck Protection Loan of $22,813 through Wells Fargo Bank, National Association, which was approved in May, 2020. In that loan application, Selen Katz, former wife of Andrew Katz, and the victim identified in the felony assault charge is identified as an employee of Seaquake. Her title, according to a LinkedIn profile is “creative director” and her date of employment is the same month in which the PPP Loan was applied for.

We don’t know why an affiliate to a $700m AUM Ireland-based venture fund needed to apply for an SBA PPP loan. We don’t know if it’s kosher or not. We do know that the SBA PPP loan program has been exploited by tens of thousands of firms. How or if President-elect Joe Biden and his Vice President, Kamala Harris, the former California Attorney General will be able to claw back and/or prosecute those who submitted false loan documents and received taxpayer money is a question that may never be answered. The good news is that detailed data regarding more than $100bil in loans handed out, including the business names and addresses pertaining to the millions who received loans in amounts under $150k is expected to be released in December.  

The above-referenced Seaquake enterprise (first exposed by MarketsMuse last October after Law360.com published a federal lawsuit against the company and its principals) also has corporate shell registrations in California, Wyoming, Florida, and the United Kingdom (at last count). According to confidential sources, at least two of its subsidiaries will be unveiled for having received SBA PPP loan support, despite former insiders acknowledging the company has no product, has no customers, and no documented salaried employees, other than Mssrs. Katz and Krueger, and in April (immediately prior to submitting loan applications), a new LinkedIn profile indicated this company added a “creative designer”, who also happens to be co-founder Katz’s wife. Ms. Katz also appears to be a fashion model and Instagram influencer, according to her profile at www.instagram/seloupe.

Now that Pfizer appears to be one step closer to solving the Covid-19 vaccine crisis, one can hope that we will all go back to business, including SBA, IRS, and state fraud investigators, who can focus on bringing SBA loan predators to justice.

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SBA Bailout Funds Going to Firms on FBI Watchlist

PPP and EIDL Fraud is as rampant as COVID-19. According to the front page story appearing in the New York Times April 26 edition, hundreds of millions of dollars in SBA bailout funds that were intended by the US Treasury to assist small businesses impacted by COVID-19 via the Paycheck Protection Program and EIDL Loan Program have been siphoned off by public companies, private equity-backed companies and thousands of small businesses, many of the latter don’t really exist other than in name only.

To many financial crime investigators who are fluent in the failings of US government’s effort to support businesses that have suffered from the pandemic, it is no surprise that tens of millions of dollars have gone to scamsters and fraud artists, including those who have been recently indicted or have been under investigation by federal law enforcement and federal and state regulatory agencies.

Shocking?! Nah. According to one senior investigator from The Financial Crimes Enforcement Network (FinCEN) “However well-intended, the PPP and EIDL loan programs created the perfect opportunity for serial financial fraud artists to exploit loopholes that a teenager could drive a Boeing jet through. PPP and EIDL fraud is rampant.”

In addition to the assortment of rogues that were outed in the above-referenced NYT coverage, it appears that individuals running a so-called fintech company called Seaquake.io, which claims to “specialize in digital asset infrastructure” along with “crypto currency trading applications” and profiled here and other online media outlets back in October, are back at it again.

Informed sources have indicated having direct knowledge that Seaquake.io principals Andrew Katz and Matthew Krueger, who have been cited in federal court for an assortment of investor fraud and wire fraud allegations, had recently filed SBA loan applications for as many as six different Seaquake entities, including Colorado-registered Seaquake Inc., Seaquake Manager LLC, Seaquake LP, Wyoming-based Seaquake OPS LLC, and a California entity, Seaquake Capital LP. Each of these entities list both Andrew R. Katz and Matthew Krueger as controlling officers.

And, it was revealed that Seaquake OPS LLC, the above-referenced Wyoming entity did in fact apply for and did receive a Paycheck Protection Loan of $22,813 through Wells Fargo Bank, National Association, which was approved in May, 2020.

AVEM Ventures LLC, a Colorado entity identified along with each of the above in a federal civil court action, lists Katz as the controlling officer and a Kenneth S. Katz as the registered agent. This entity is also believed to have applied for loans and grants intended for businesses that have been impaired by the COVID-19 pandemic.

There is only one problem, the company is a scam, according to a former business development executive for Seaquake, who worked for the company while he was also registered with Finra as a senior executive for San Francisco based brokerdealer US Capital Global. That former employee (his tenure lasted all of 7 months and he has since moved to the role of ” Director, Digital Wealth Solutions” for Apex Clearing Corp.” has stated “Seaquake is not a real business; the product(s) they claim to have are “nothing more than vaporware”; they have no employees drawing salaries other than Katz, (who recently added his wife Selen to the ‘payroll’, though it would appear that her full-time job is that of an Instagram influencer, along with Krueger and UK-based Dylan Knight, who is listed as the chief technology officer on corporate documents. This is all despite claims made on the company website as to having multiple employees; “a canard”, according to one source who says the “serial fabrications made by the company are advanced further by fraudulent representations made in an assortment of investor solicitation documents the company has sent to dozens of individuals and fund managers.”

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Seaquake’s Matthew Krueger (L), Andrew Katz (R)

Katz was seen in December vacationing at a resort in Cabo with his swimsuit model wife, a Turkish national whose opportunity to apply for US citizenship comes on the third anniversary of their marriage, August 2 2020. How the US Immigration and Naturalization Service (INS) or Department of Homeland Security view applicants who are married to accused money launders is only something those agencies can respond to. In early March 2020, the couple was spotted posing for photos on the beach in Southampton, New York. It is rumored that Katz is now hiding out in New York City. Neither he or his San Francisco-based partner Krueger, both accused of defrauding at least several investors, including a Florida-based family office this past August, have made themselves available for comment.

The San Francisco branch of BBVA Compass Bank, the bank of record for an assortment of Seaquake enterprises, had no comment has to whether they facilitated EIDL loan processing or payments to the Seaquake’s alleged criminal enterprise.

One can only hope that FBI and SEC efforts lead to a long-term quarantine for these individuals.

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Another Cryptocurrency Trading Scam-Former NYSE Floor Broker Charged

In a scheme that reads much like the MarketsMuse story published in October profiling so-called digital asset firm Seaquake.io, whose principals Andrew Katz and Matthew Krueger fraudently claimed to be operating a high-frequency trading system for cryptocurrencies, Michael W. Ackerman of Ohio, and a former NYSE floor broker, was charged yesterday by the US SEC, the CFTC and the US Attorney for the Southern District of New York for defrauding investors out of $33million in the course of operating cryptocurrency trading scam.

Ackerman, much like Seaquake’s Katz and Krueger, provided investors with phony documents that claimed his firm’s two entities, Q3 Trading Club and Q3 I LP, operated a HFT trading firm that developed a “proprietary trading algorithm” for trading cryptocurrencies. As it turns out, Ackerman, along with with two other defendants charged in the case, used their investors’ funds to purchase homes, cars, jewelry and other personal items. One can only guess that Katz and Krueger of Seaquake stole Ackerman’s playbook for how to defraud investors, as Ackerman apparently first advanced his scheme in 2017 and continued until 2019 according to the charges.

While Katz and Krueger have not yet been hit with criminal charges in their cryptocurrency trading scam, the Ackerman timeline would suggest that the Seaquake operators, who still maintain a company website and are purportedly still soliciting investors, can expect an early morning knock on their doors sometime soon.

The Ackerman Q3 saga has been reported by multiple outlets.

SEC’s complaint

Michael Ackerman allegedly raised $33 million in a fraudulent crypto trading scheme. Further, Ackerman and his two partners misled investors by claiming they had developed an extraordinarily profitable crypto trading algorithm. One of the partners was a doctor. (CrowdFundInsider)

According to the SEC, around 150 investors, including many in the medical fraternity, lost money in the alleged fraud. The perpetrators floated Q3 Trading Club and Q3 I LP – two entities that enabled the digital currency investment offering.

The SEC also alleged Ackerman used most of the money raised from the hapless investors to buy jewelry, cars, and to purchase and renovate a house.

Moreover, he lied to investors about the profitability of his trading, the status of the funds and their safety.

He “doctored” computer screenshots of trading accounts to give a false impression that they held as much as $310 million.

“Ackerman exploited popular interest in digital assets as a means to obtain millions of dollars for his personal use,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.

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Seaquake.io Fraud; So-Called Crypto Trading Firm Makes Investor Money Disappear

(Source: Law360.com ) Andrew R. Katz, aka Ross Katz, aka Stark Katz  an Arvada, Colorado man who is last known to reside in either of New York City or Southern California, and uses California, Colorado, Florida and New York drivers licenses while claiming to be a former FX trader for EFG Bank, and who now presents himself as co-founder of  Seaquake.io, a”digital asset infrastructure company”, along with Seaquake CFO Matthew J. Krueger of San Francisco, who claims to be a former PayPal “Finance Manager” and the former “Head of Finance” for Venmo, have both been named as Defendants in a Federal Court complaint alleging the two men advanced a systematic scheme to defraud a Florida-based investor group. Also named in the action is Dylan Knight, a UK man who is listed as a co-founder and Chief Technology Officer for the company. The Federal Court complaint cites multiple accounts of securities fraud, fraud in the inducement, and wire fraud.

THIS STORY UPDATED SEPTEMBER 2020 TO MARK THE FIRST ANNIVERSARY OF THIS EXCLUSIVE REPORT. CLICK HERE FOR THE UPDATE

According to a Zurich-based private equity fund manager who had been repeatedly approached by Katz to invest, “All of the patented elements of old-fashioned investor fraud have been perpetrated by these Seaquake characters, casting yet another shadow of skepticism on the entire digital asset industry. It is amazing how brazen these individuals are. Based on their apparent actions, one can hope that law enforcement officials will do their jobs and prosecute these people quickly. Even if the wheels of justice spin slow, anyone in the industry should be alert to these people and be aware they have already destroyed any future professional career in any industry.”

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Andrew R. Katz, Seaquake.io Founder (l), Matthew J. Krueger, Seaquake “CFO”

According to the Federal Court complaint, Katz lists former jobs at UBS Bank and EFG Capital in investor offering documents, the company’s website, as well as his Linkedin profile, despite Finra having no record of Katz being licensed by that securities industry regulator at any time, and despite EFG Capital having no record of his employment. More importantly, the court filings include a series of email communications, text messages, and group chat messages on Linkedin in which Katz and Krueger made a series of fraudulent representations that induced the investors to enter into a so-called “SAFE Agreement” with the company. Investors were of the belief the funds would be deployed to a high-frequency trading application that Seaquake principals, including so-called CTO Dylan Knight of the UK, claimed to be operating.

JANUARY 2021 UPDATE: SEAQUAKE CO-FOUNDER ANDREW KATZ CHARGED WITH FELONY ASSAULT AND GRAND LARCENY IN NEW YORK; FACES MINIMUM 2 YEAR PRISON SENTENCE

CLICK HERE FOR LATEST

THIS STORY UPDATED SEPTEMBER 2020 TO MARK THE FIRST ANNIVERSARY OF THIS EXCLUSIVE REPORT. CLICK HERE FOR THE UPDATE

According to the complaint, only several days after the investors executed the agreement with the company and wiring funds to a Seaquake account at Signature Bank in New York, Katz then informed the investors the high-frequency trading application was “not in fact in production and the [investor] funds would be placed into a money market account until such time as the software was ‘production ready.” Defendants Krueger and Katz also made a series of assertions as to pending institutional investors who committed to providing capital to Seaquake, all of which turned out to be false, according to the filing. According to court documents and independent background searches, it turns out that Katz has driver licenses in New York, Florida, Colorado, and California, and is also registered to vote in Florida.

UPDATE MARCH 2021: SEAQUAKE ENTITY ‘SEAQUAKE OPS LLC’, A WYOMING CORPORATE SHELL NOW SUSPECTED OF SBA LOAN FRAUD; APPLIED FOR AND RECEIVED PPP-RELATED LOAN

This latest charge adds to a pending list of other criminal matters, including a likely bank loan fraud perpetrated by Katz and Krueger in connection with Seaquake OPS LLC, a Wyoming entity that is part of the web of Seaquake companies. Recently discovered, Seaquale OPS LLC did in fact apply for and did receive a Paycheck Protection Loan of $22,813 through Wells Fargo Bank, National Association, which was approved in May, 2020. In that loan application, Selen Katz, former wife of Andrew Katz, and the victim identified in the felony assault charge is identified as an employee of Seaquake. Her title, according to a LinkedIn profile is “creative director” and her date of employment is the same month in which the PPP Loan was applied for.

Katz has a history of criminal charges, from trespassing charges in New York to domestic abuse charges in Los Angeles. This private investigator’s background report is telling. Other background searches indicate that Katz, along with his mother, Alyson Katz of Arvada, Colorado were plaintiffs in a class action law suit brought against a Utah-based school for emotionally-challenged youth, a facility that Katz was apparently sent to by his parents and attended for at least two years while he was a teenager.

selen katz instagram seloupe andrew katz seaquake scamIf only Andrew Katz’s wife, Selen Katz, a Turkish national and Instagram Influencer who apparently works as a swimsuit model, didn’t need Katz to help her secure a Green Card. Otherwise, perhaps she’d realize that being married to a scam artist is not the path to a happy future in the U.S. More important, actions pending against Katz could raise eyebrows from US immigration authorities who will be evaluating her request for citizenship. She should hope that more recent frauds committed by her husband and his partner in connection with PPP loans don’t add fuel to the criminal investigation fire burning under their butts.

THIS STORY UPDATED SEPTEMBER 2020 TO MARK THE FIRST ANNIVERSARY OF THIS EXCLUSIVE REPORT. CLICK HERE FOR THE UPDATE

Back to the primary coverage….Once the investors realized they had been scammed and then demanded the return of the funds, Katz and Krueger took steps to dissolve “Seaquake Partners LP”, the corporate entity the investors sent their funds to, according to the corporate register agent. According to records in the filing, Defendants Katz and Krueger wrote to the investor informing “we will not communicate with your attorney and we have no obligation to provide any further information..” Concurrently, the Defendants transferred the investor funds from the company account at Signature Bank in New York to multiple, newly-created Seaquake entity accounts at a Compass Bank BBVA branch in California, near where Krueger lives. Thereafter, bank records indicate Katz and Krueger dispersed the funds to various internal company accounts, and then transferred a bulk of the investor’s funds to crypto exchange Coinbase, which they moved days later to crypto exchange and custody platform Binance.

As acknowledged by the defendants’ attorney, Yasin Daneshfar of Florida law firm Becker and Poliakoff, Katz and Krueger also moved tens of thousands of dollars to personal accounts the defendants established at Compass Bank. Attorney Daneshfar argued “the so-called “SAFE Agreement” did not preclude the defendants from dispersing the money as they saw fit.” Daneshfar further acknowledged in a recent court appearance that, in addition to the defendants enriching themselves with much of the investor’s funds, the investors’ funds have also been used by Katz and Krueger to pay the Becker law firm in their effort to defend themselves against the investors in federal court. When challenged with this use of funds by the federal court judge who pointed to the series of communications from Katz to the investors, Attorney Daneshfar was said to have responded to the judge with a smirk and a shrug of his shoulders.

While much of the information obtained in the federal court filings may seem to be the source of good fodder for a ten cent crime novel, according to one Switzerland-based venture capital executive who is focused on the digital currency space and who had also been solicited by Seaquake to serve as both an advisor and to provide investment funds, “All of the patented elements of old-fashioned investor fraud have been perpetrated by these Seaquake characters, casting yet another shadow of skepticism on the entire digital asset industry. It is amazing how brazen these individuals are. Based on their apparent actions, and whether or not they get caught by law enforcement officials, they have effectively destroyed any future professional career in any industry.”

david streltsoff-seaquakeDespite all of the shenanigans, David Streltsoff, a Senior Vice President for San Francisco broker-dealer “US Capital Global” and a former salesman for high-frequency trading firms was apparently not deterred from associating himself with Seaquake. According to his LinkedIn profile in the months of September through November 2019, Streltsoff served as “Business Development Executive” for the company, while also a registered broker-dealer for US Capital. Streltsoff’s rofile was updated at the end of November after Streltsoff was served with a federal court subpoena for information pertaining to his involvement with Seaquake. According to a former investigative journalist, now a due diligence advisor to fund managers evaluating crypto startups, Streltsoff told him “It took one too many days for me to figure out this company was peddling nothing more than vaporware, and the scam accusations against them were eye-opening, so I terminated my association with them.” Jeffrey Sweeney, the CEO of US Capital Global has not replied to inquiries.

Update: Since the litigation was filed, at least one other investor has been identified as having been scammed. That investor was apparently introduced to the company in June 2019 by a friend who was employed by Seaquake.io as “business development executive.” That friend sent the investor a so-called Safe Agreement, along with wire payment instructions to a Seaquake bank account held by a Bank of America branch in Colorado. Once that investor learned of the recent court action, the investor contacted Katz and demanded the return of the money sent to Seaquake in July. Katz replied via email stating “we have no record of having executed a Safe Agreement with you, and the former employee provided you with incorrect wire instructions, so we never received your money, and we don’t owe you anything.” When the investor provided Katz and Krueger with Bank of America correspondence that affirmed the Seaquake account information was correct and confirmation from the bank the wire payment had in fact been credited to the account Katz created, Katz ceased all further communication. That investor has since filed a criminal complaint and the former executive is said to be cooperating with law enforcement authorities. Perhaps Mr. William Bao Bean, a principal of SOSV Ventures / Chinaccelerator –which recently disclosed making an investment in “Seaquakes”, as did Jeremy Colless, Managing Partner of down-under VC “Artesian Capital” both failed to get the memo…(?)

THIS STORY UPDATED SEPTEMBER 2020 TO MARK THE FIRST ANNIVERSARY OF THIS EXCLUSIVE REPORT. CLICK HERE FOR THE UPDATE

In November, the federal court judge lifted the temporary restraining order on bank accounts controlled by Seaquake principals Katz and Krueger, and cited concerns as to whether the Florida court was the appropriate jurisdiction to litigate the action. Plaintiffs are expected to continue the litigation.

Katz was last seen in December at the Hotel Kai Tulum resort in Cabo San Lucas vacationing with his wife, who posted an assortment of photos baring ‘birthday bling’ while sipping margaritas.

THIS STORY UPDATED SEPTEMBER 2020 TO MARK THE FIRST ANNIVERSARY OF THIS EXCLUSIVE REPORT. CLICK HERE FOR THE UPDATE

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Remembering D-Day, June 6, 1944

We pay tribute to all WWII Veterans, those who landed on the beaches of Normandy, France to repel Nazi Germany’s forces and those who made the ultimate sacrifice on D-Day, June 6, 1944, to defend the values that we hold so dear.

MarketsMuse Curators extend a warm salute to Mischler Financial Group, the industry’s oldest investment bank owned and operated by Service-Disabled Veterans for providing additional color to this post.

The Normandy landings were the landing operations on Tuesday, 6 June 1944 of the Allied invasion of Normandy in Operation Overlord during World War II. Codenamed Operation Neptune and often referred to as D-Day, it was the largest seaborne invasion in history. The operation began the liberation of German-occupied France (and later western Europe) from Nazi control, and laid the foundations of the Allied victory on the Western Front.

Planning for the operation began in 1943. In the months leading up to the invasion, the Allies conducted a substantial military deception, codenamed Operation Bodyguard, to mislead the Germans as to the date and location of the main Allied landings. The weather on D-Day was far from ideal and the operation had to be delayed 24 hours; a further postponement would have meant a delay of at least two weeks as the invasion planners had requirements for the phase of the moon, the tides, and the time of day that meant only a few days each month were deemed suitable. Adolf Hitler placed German Field Marshal Erwin Rommel in command of German forces and of developing fortifications along the Atlantic Wall in anticipation of an Allied invasion.

The amphibious landings were preceded by extensive aerial and naval bombardment and an airborne assault—the landing of 24,000 US, British, and Canadian airborne troops shortly after midnight. Allied infantry and armored divisions began landing on the coast of France at 06:30. The target 50-mile (80 km) stretch of the Normandy coast was divided into five sectors: Utah, OmahaGoldJuno, and Sword. Strong winds blew the landing craft east of their intended positions, particularly at Utah and Omaha. The men landed under heavy fire from gun emplacements overlooking the beaches, and the shore was mined and covered with obstacles such as wooden stakes, metal tripods, and barbed wire, making the work of the beach-clearing teams difficult and dangerous. Casualties were heaviest at Omaha, with its high cliffs. At Gold, Juno, and Sword, several fortified towns were cleared in house-to-house fighting, and two major gun emplacements at Gold were disabled using specialized tanks.

The Allies failed to achieve any of their goals on the first day. CarentanSt. Lô, and Bayeux remained in German hands, and Caen, a major objective, was not captured until 21 July. Only two of the beaches (Juno and Gold) were linked on the first day, and all five beachheads were not connected until 12 June; however, the operation gained a foothold which the Allies gradually expanded over the coming months. German casualties on D-Day have been estimated at 4,000 to 9,000 men. Allied casualties were at least 10,000, with 4,414 confirmed dead.

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GTS and Mischler Financial Group Hold First Annual Fleet Week ‘Veterans in the Workplace’ Luncheon at the NYSE


Working Luncheon will celebrate veterans in the workplace with attendees from notable publicly traded companies

May 16, 2019 10:00 AM Eastern Daylight Time

NEW YORK–(BUSINESS WIRE)–GTS, a leading electronic market maker across global financial instruments and the largest designated market maker at the New York Stock Exchange (“NYSE”), in partnership with veteran-owned broker dealer Mischler Financial Group, will hold the first annual ‘Veterans in the Workplace’ luncheon at the NYSE on May 21, 2019.

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The luncheon will kick off the 31st annual Fleet Week New York, which will take place from May 22-28. Attendees will include veteran C-level executives and employees of publicly listed companies, high-ranking military officials, and student veterans from local New York colleges.

The event is being organized by Mark Otto, Global Markets Commentator for GTS and U.S. Marine Corps combat veteran. Otto also serves as Executive Director of the United War Veterans Council (“UWVC”), which is the organization that produces the New York City Veterans Day Parade.

“I am thrilled to organize the first-ever ‘Veterans in the Workplace’ luncheon at the NYSE to kick off Fleet Week in New York,” Otto said. “This event will be a great opportunity to honor both those who are actively serving as well as veterans who, after serving our country, have rejoined the workforce to serve our capital markets.”

The event will feature three keynote speakers:

  • Dean Chamberlain, CEO of Mischler Financial, West Point graduate and former U.S. Army Officer;
  • Rear Admiral John Mustin, Deputy Commander of the U.S. Second Fleet and Naval Surface Force Atlantic;
  • Jon Scholl, President of the Health Group at Leidos, U.S. Naval Academy graduate and 5-year U.S. Navy veteran; and
  • Diego Rubio, U.S. Army Veteran and Co-founder of Women Veterans on Wall Street (“wVOWS”)

“It is an honor to deliver a keynote address for a unique program that includes fellow military veterans in the workforce,” Chamberlain said. “As the CEO of the industry’s oldest service-disabled veteran-owned business, it is always inspiring to work alongside corporations that provide veterans with opportunities to leverage the skills acquired in the course of their service and provide focused programs to help them successfully transition to new careers.”

In addition to the keynote speakers, the luncheon will provide attendees with a networking opportunity, and will highlight topics including veteran-hiring retention and the different initiatives companies are taking to help veterans.

Approximately forty C-level executives and employees from publicly listed companies such as Wabash National (NSYE: WNC), DHI Group (NYSE: DHX), Leidos (NYSE: LDOS) and Samsung will be in attendance.

Fleet Week is a weeklong celebration of the U.S. military’s sea services and gives the citizens of New York the opportunity to meet and interact with members of the U.S. Navy, U.S. Marine Corps and U.S. Coast Guard. This year, the U.S. Navy expects about 2,600 Sailors, Marines and Coast Guardsmen will be on hand.

About GTS

GTS is a global electronic market maker, powered by combining market expertise with innovative, proprietary technology. As a quantitative trading firm continually building for the future, GTS leverages the latest in artificial intelligence systems and sophisticated pricing models to bring consistency, efficiency, and transparency to today’s financial markets. GTS accounts for 3-6% of daily cash equities volume in the U.S. and trades over 10,000 different instruments globally. GTS is the largest Designated Market Maker (DMM) at the New York Stock Exchange, responsible for nearly $12.5 trillion of market capitalization.

For more information on GTS, please visit www.gtsx.com.

About Mischler Financial Group

Established in 1994, Mischler Financial Group (“Mischler”) is the financial industry’s oldest diversity-certified investment bank and institutional brokerage owned and operated by service-disabled veterans, the firm was the first FINRA member to be designated as a Service-Disabled-Veteran-Business Enterprise (SDVBE). Mischler is recognized for its role as a leading capital markets boutique operating across the primary and secondary financial market ecosystem. The firm serves Fortune corporate treasurers in the course of their issuing new debt and equity offerings and administering their respective corporate share repurchase aka 10b-18 programs. In many initiatives, Mischler is viewed as a pure complement to the role played by issuers’ lead underwriters and also assists state and local governments in selling tax-exempt and taxable municipal securities. Investment management clients of the firm’s secondary market execution platform include a broad spectrum of public plan sponsors and investment fund managers. Mischler also provides cash management for government entities and corporations, and asset management programs for liquid and alternative investment strategies. Mischler maintains offices in 8 major cities and is staffed by more than 50 securities industry veterans.

Visit https://www.mischlerfinancial.com for more information.

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Trump & Co Enable Shareholder Lawsuits Against Cuba; Libertad Act 3.0

Long Live the Libertad Act! Taking aim at the Cuban Government, US President Donald Trump and his Board of Directors, led by Secretary of Treasury Steve Mnuchin and Secretary of State Mike Pompeo. announced that US shareholders of companies that were seized and nationalized by Fidel Castro when the now-deceased Cuban ruler first took control of Cuba in 1959 can now sue the Cuban government for losses they sustained. Of the several dozen US companies nationalized by Castro in 1959, shareholders of Vicana Sugar Co., also known as Compania Azucarera Vicana, lost the entirety of their investments and can now seek recourse.

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Secretary of State Mike Pompeo

Secretary of State Mike Pompeo announced that the US will enforce a controversial provision of the decades-old trade embargo on Cuba that will allow US citizens to file lawsuits in US federal court against businesses that operate on property seized by the Cuban government during the revolution — the first administration to do so since the law’s creation in 1996. Pompeo said Title III of the Helms-Burton Act, also known as the Libertad Act, would be implemented in full effective May 2.

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Treasury Secretary Mnuchin and Wife Displaying Enlarged Version of Vicana Sugar Co. stock certificate

According to at least two White House sources speaking off the record, Treasury Secretary Mnuchin was influential in guiding President Trump to implement this new tactic after Mnuchin’s wife had purportedly acquired a large cache of stock certificates from an estate that owned the shares and were issued by Vicana Sugar Company months before Fidel Castro nationalized that company in November 1959. The extent of Mnuchin’s holdings is not known, but include many 1000 share certificates with an original ‘par value’ of $3.00 per share.

Formed in 1935, shares in Vicana Sugar Co. were listed on the New York Stock Exchange and traded as high as $6 per share before Castro’s seizure forced the NYSE to de-list the company’s shares. In January 15, 1959, a large block of stock was purchased by a private investor, whose estate is rumored to have since sold most of those share certificates to a trust controlled by Mnunchin. As reported here previously, Mnuchin had also purportedly acquired a cache Estonia Government bonds issued in the 1940’s that became worthless after Russia’s annexation of Estonia. Those Estonia bond certificates soared in value on eBay last year after rumors of US government efforts to coerce Russia to make good on that defaulted debt and outstanding interest owed to bond holders.

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Vicana Sugar Co 100 Share certificate-Vicana Sugar Co. aka Compania Azucarera Vicana-

A small number of Vicana Sugar Co share certificates, in both 100 share and 1000 share denominations are listed on eBay and offered at upwards of $700 for each certificate. As evidenced by stamp on share certificate in amount of 1000 shares and par value $3.00 each share (see photo).

In November 1959, the company, along with its land assets, was nationalized by the Cuban Government and shareholders suffered a complete loss, as did investors holding shares in other Cuba-based US companies whose assets were nationalized by the new Cuban regime. In the ensuing years, multiple legal claims were brought in US courts—and affirmed in favor of plaintiffs, yet those court judgments provided for no recourse against the Cuban Government. As reported in April 2019, US President Donald Trump approved the lifting of limits on Americans ability to sue over property confiscated by the Fidel Castro government—opening the door to a prospective new round of legal action that can be brought against Cuban government.

If you’ve got a hot insider tip, a bright idea, or if you’d like to get visibility for your brand through MarketsMuse via subliminal content marketing, advertorial, blatant shout-out, spotlight article, news release etc., please reach out to our Senior Editor via cmo@marketsmuse.com

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jane-street-corporate-bond-market-maker

Quant-Centric ETF Market-Maker Jane Street Adds Corporate Bond Axe

Jane Street Capital, the quant-centric proprietary trading firm best known for its dominant role in the ETF marketplace–including its role as a liquidity provider for stocks and options as well as exchange-traded funds to buy-side accounts– has a new arrow in its quiver; making markets in corporate bonds.  The firm disclosed that it is lifted its anonymous veil and is now a ‘disclosed dealer’ on electronic bond trading platform MarketAxess (NASDAQ: MKTX).

jane-street-capitalShall we guess whether the 6-pack banks and their first cousins–the industry’s legacy source of liquidity to buy-side managers navigating the corporate bond market landscape are (i) happy to have a new competitor, (ii) happy not to have to make markets and tie up balance sheets with inventory of hard-to-move corporate bonds or (iii) f–king pissed that tech-focused prop trading firms are now invading a secondary market product area that banks have viewed as their exclusive territory since time began?

As noted by WSJ reporter, Matt Wirz, investment banks and brokerages are the main go-betweens for money managers looking to buy and sell corporate bonds, about $25 billion of which trade daily in the U.S. Now, Jane Street Capital LLC, has begun offering the same service to investment firms on electronic trading platform MarketAxess and has recruited about 60 clients, people familiar with the matter said.

The move puts Jane Street in direct competition with traditional dealers like Goldman Sachs Group Inc. and JPMorgan Chase & Co. It also shows how bond markets are being transformed by electronic and algorithmic trading, innovations that swept stock and currency markets more than a decade ago.

Jane Street’s headquarters are a five-minute walk from Wall Street, but in some ways the firm is more akin to a Silicon Valley startup than an investment bank. “They have a different approach—there’s not a lot of sales and a lot of technology,” says Mike Nappi, a bond trader for mutual-fund manager Eaton Vance Corp. who has bought and sold bonds through Jane Street. “That’s different from a traditional bank where they have a lot of sales and the technology is more like Microsoft Excel.”

By joining those ranks, Jane Street aims to get recognition from asset managers for the balance sheet it uses to buy and sell with them, ultimately boosting the amount they trade with the firm, said Matt Berger, the firm’s head of fixed income and commodities trading. Jane Street trades about $550 million worth of corporate bonds in the U.S. every day, he said. This amounts to about 2% of the overall market, five times more than the firm traded two years ago.

That expansion would have been impossible without the recent spread of electronic bond trading.

Technology-driven trading firms like Jane Street and Virtu Financial LLC emerged after stock exchanges electronified in the 1990s, connecting  buyers and sellers through computers and reducing trading times to fractions of a second. The firms’ computer scientists built programs to cull market data and identify profitable trades that humans missed. Now, quantitative trading firms dominate the stock market.

Electronic trading has been slower to catch on in debt markets because bonds typically trade over-the-counter rather than on centralized exchanges. That has begun to change over the past five years as banks and money managers turn to electronic trading and data analysis to trim costs and to connect to more trading partners. Electronic trading platforms like MarketAxess have given Jane Street and other quantitative investors venues to apply the technology they used in other markets.

MarketAxess accounted for about 18% of all U.S. investment-grade bond trading last year, up from 12% in 2014, according to data from the company.

If you’ve got a hot insider tip, a bright idea, or if you’d like to get visibility for your brand through MarketsMuse via subliminal content marketing, advertorial, blatant shout-out, spotlight article, news release etc., please reach out to our Senior Editor via cmo@marketsmuse.com

Jane Street, founded by four partners including Michael Jenkins and Robert Granieri, now has about 50 bond salespeople and traders. Recruiting materials tout chess facilities, office gyms, math puzzle contests.

The firm trades less debt overall than most banks, which still employ hundreds of human sales and trading staff. But when it comes to its inventory of corporate bonds, “we are on par with the banks,” Mr. Berger said.

Jane Street hold bonds on its balance sheet for days or weeks to facilitate so-called portfolio trades of bundles of bonds often tied to ETFs. The portfolio deals normally range from $50 million to $750 million but can go as high as $2 billion, a person familiar with its trades said.

Read the full WSJ story here

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TradeWeb Cashes In, Broker-Dealer Investors Cash Out via IPO

Bonds and Billions 3.0…Tradeweb Markets, one of the original electronic bond trading pioneers, which first introduced its dealer consortium platform in 1996, proved that patience is a virtue when it comes to monetizing enterprise value. The company raised $1.1billion via its Nasdaq-listed IPO yesterday (NASDAQ:NW). Illustrating investor attraction to owning a piece of the fintech company focused on fixed income trading, the company increased the number of shares they first planned to offer from 27.3 million to 40 million shares and upped the ante for the IPO price from a $24-$26 range to slightly north of $27. The IPO puts a $6bil valuation on the company–whose original investors include a consortium of broker-dealers.

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Tradeweb CEO Lee Olesky photo courtesy of BRENDAN MCDERMID/REUTERS

Per snippet from Bloomberg News, Tradeweb intends to use proceeds to buy shares held by eight of the 11 large banks that own stakes in the company, including Bank of America Corp., Goldman Sachs Group Inc., Morgan Stanley and UBS Group AG, according to its registration statement filed with the Securities and Exchange Commission.

Tradeweb’s IPO is also the biggest for a financial services company in the U.S. since online lender GreenSky Inc. raised $874 million in May.

The offering follows benefits administrator Alight Inc.’s decision in March to postpone plans to raise up to $800 million in an IPO. Alight and Tradeweb are both owned by private equity firm Blackstone Group LP, which led the $17 billion acquisition last year of Tradeweb parent Refinitiv from Thomson Reuters Corp. Tradeweb, founded in 1996, builds and runs electronics markets for trading government bonds, derivatives, exchange-traded funds and other financial instruments over the counter. It handled an average of $549 billion in daily trades in 2018, according to its IPO prospectus.

Tradeweb posted net income of $160 million on $684 million in revenue last year.

As noted by Liz Hoffman of the WSJ, online venues are gaining ground in bond trading, digitizing orders that were once placed over the phone. At MarketAxess Holdings Inc., Tradeweb’s closest listed peer, trading volumes have more than doubled since 2014.

At $27, Tradeweb’s stock will list at about 30 times the company’s annual earnings. MarketAxess trades at nearly 50 times its earnings, while exchanges such as NYSE ownerIntercontinental Exchange Inc. fetch about 25 times their earnings.

JPMorgan Chase & Co.Citigroup Inc., Goldman Sachs and Morgan Stanley led the offering. Tradeweb will start trading Thursday under the symbol TW on the Nasdaq Global Select Market, according to the statement

Affiliates of Refinitiv will continue to hold about 54 percent of Tradeweb’s outstanding common stock, according to filings.

If you’ve got a hot insider tip, a bright idea, or if you’d like to get visibility for your brand through MarketsMuse via subliminal content marketing, advertorial, blatant shout-out, spotlight article, news release etc., please reach out to our Senior Editor via cmo@marketsmuse.com

HONR-ETF

Hoorah! HONR ETF; ESG is Now the New Normal For Institutional Investors

ETFs $HONR and $VETS advance an intriguing investment thesis: companies that stand up for military veterans outperform their peers.

Much like the view that women-led VC firms tend to outperform their male-dominated competitors, the thesis for investing in a culture-centric portfolio of companies is an approach now used by a broad spectrum of leading institutional investors. Dubbed “ESG” (Environmental, Social and Governance), the acronym refers to the three central factors in measuring the sustainability and ethical impact of an investment in a company or business. According to proponents, these criteria help to better determine the future financial performance of companies (return and risk). Of the 1500+ exchange-traded funds, only a small percentage provide a vehicle by which investors can express their interest in companies based on their cultural criteria. And, within the context of a thematic ETF comprised of companies that stand-out with respect to their leanings towards military veterans, there are only two ETFs to choose from.

Offering accolades to public companies that stand out for recruiting and supporting military veterans as well as active service members is no longer just a virtue, it is, according to more than a few experts, a winning investment strategy. Insightshares led the charge with the launch last January of InsightShares Patriotic Employers ETF (NYSEARCA:HONR), which is comprised of approximately 100 constituents and comes with an expense ratio of 0.65%. In April of 2018, ETF firm Pacer introduced The Pacer Military Times Best Employers ETF, $VETS–an index of 37 companies that is heavily-weighted with financial, industrial and information technology companies has an expense ratio of 0.60%

Truth be told, the performance for both of these funds correlates to the S&P 500, the distinction is an investment in these ETFs includes a proxy to support carefully-vetted veteran-centric philanthropies, as both donate 10 percent of the management fee to military-related charities.

Matt Villarreal, Head of Equity Trading for Mischler Financial Group, the industry’s oldest broker dealer owned & operated by Service-Disabled Veterans stated, “The constituents of the two respective veteran-centric ETFs include the most recognized and most widely-held Fortune corporations, which infers overall performance will correlate to major indices. The thesis that select companies that occupy thought-leadership positions when it comes to hiring military veterans and having former military officers in senior roles is easily defended. Companies that prominently support the military veteran community generally have higher employee morale and evoke higher customer embracement when compared to peers. The best part of these ETFs is they also have a dedicated mission to support veteran philanthropies, which proves crucial to the folks who have put themselves in harm’s way to protect the rest of us.”

Rich Cea, Head of Insightshares provides his perspective courtesy of a recent FOX Business Interview:

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MEMX-larry tabb perspective

MEMX-Do the US Equities Markets Really Need 14 Venues?!

For those who missed the MarketsMuse memo from Jan 14, there appears to be yet another exchange coming to the US Equities markets, as if the industry needs one more platform to facilitate trading in publicly-listed stocks. The latest platform, which is still on the whiteboard, is a consortium-based initiative named “Member Exchange”, whose creators have dubbed “MEMX.” As widely reported, the proposed exchange is being spearheaded by two of the top NYSE Designated Market-Making firms, Citadel Securities and Virtu-both of which are best known for their domain fluency in the world of high-frequency trading and both came to be NYSE DMMs by gobbling up legacy NYSE “specialist firms” after the now 227-year old institution was transformed in 2005 from a member-controlled “non-profit” into a for-profit enterprise, which is now controlled by the $42billion market cap company, Intercontinental Exchange, Inc. (NYSE:ICE).

MEMX challenges NYSE NASDAQ
MEMX wants to compete with NYSE and NASDAQ

Joining Citadel and Virtu in this initiative-which vies to compete directly with NYSE, Nasdaq and the assortment of other venues that facilitate trading in listed stocks is a collective of retail brokerage firms (Charles Schwab, E-Trade, TD Ameritrade, Fidelity Brokerage, and Bank of America Merrill Lynch) along with investment banks Morgan Stanley and UBS).  The $70 million question (the amount of capital they’ve put together to seed this initiative) as to why this consortium has been formed and what their game plan is has been a topic of spirited discussion across the sell-side. The moving parts necessarily connect to market data fees, payment for order flow (“PFOF”) and incentive rebates paid to those who provide liquidity to the markets. And most important, who profits the most from the complex fee schemes.

Perhaps the most granular coverage and commentary have been courtesy of industry think tank TABB Group, the research and strategic advisory firm focused exclusively on capital markets. Firm principal Larry Tabb has provided objective insight courtesy of this week’s dissertation, excerpted here:

larry tabb
Larry Tabb, TABB Group

The question is: Why on earth do we need a 14th US equity exchange?

To understand why the brokers feel they need a new exchange, you need to understand a bit of history. Historically, there were two major equity exchanges: the 200-plus-year-old NYSE and the Nasdaq. These were member-owned exchanges that operated like utilities. After some regulatory challenges with the NYSE and Nasdaq, the SEC opened up the exchanges to competition, and a number of new equity matching platforms were developed. These new quasi-exchanges launched in the late 1990s/early 2000s and, while they looked and acted like exchanges, they were called ECNs and operated under a lower regulatory threshold. These platforms automated predominantly the Nasdaq market. In 2005 the SEC passed Regulation National Market System, or Reg NMS, which forced the NYSE to face competition as well.

By the mid-2000’s the traditional exchanges were also allowed to go public as they moved away from member-owned utilities. During the late 90’s and early 2000s, the traditional exchanges bought up the ECNs, and just as it appeared that the market would be reconsolidated under NYSE and Nasdaq, Dave Cummings, the CEO of Tradebot, along with another high-frequency firm, Getco (which became Knight and subsequently was acquired by Virtu), entered into the ECN space with the development of BATS. By 2006 BATS obtained funding by industry participants and it became a quasi-industry consortium.

When BATS entered the market, it provided competitive pressure to keep both Nasdaq and the NYSE in check. However, as BATS grew, an opportunity emerged for BATS to become a full-fledged exchange (2008), go public (2016), and, in 2017, get acquired by Cboe.

As BATS went public and subsequently was acquired by Cboe, its governance changed. Once BATS became public and was acquired by Cboe, instead of being managed as a lower-cost industry-owed entity, it needed to be run like a for-profit entity, similar to the NYSE and Nasdaq. During the 10-year span since BATS became an exchange, other exchanges were acquired by the NYSE and Nasdaq, until we reach today, when the 13 US equity exchanges are all – except for one, IEX – owned by NYSE (which was acquired by ICE in 2012), Nasdaq and Cboe.

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As the major exchange groups consolidated many of the competitive exchanges, industry brokers/institutional investors began to feel that the exchanges were becoming less responsive to the dealers (and their clients) that sent them order flow. This created frictions between the dealers and the exchanges and culminated with the October 2017 SEC Market Data roundtable, where it appeared the dealers and larger investors were targeting the three major exchanges as being non-responsive, while the exchanges responded that the industry was being needlessly greedy and attacking their business model.

Et voilà, the announcement in early 2019 of the Member Exchange.

MEMX-larry tabb perspective

So What’s MEMX Thinking?

TABB believes MEMX’s initial strategy will include the following:

SIP Rebate

While BATS started out as an ECN (a lit ATS), the opportunity to become an ECN has become problematic, as ECNs are not entitled to SIP market data revenue, which could easily provide MEMX with $10 to $20 million a year, as IEX with less than 3% market share generates approximately $10 million in SIP revenues. In addition, given the competitive threat, the order routing facilities that used to be operated by some of the smaller exchanges are no longer in operation, meaning an ECN needs to rely on an exchange for universal access, and given the competitive threat, it is unlikely that an exchange owned by the large three providers would develop that infrastructure. So, for MEMX to share in SIP revenues and control its own routing, it needs to become a regulated exchange.

Cookie-Cutter Model

The fastest way to obtain exchange status is to deploy a “cookie cutter” exchange, modeled exactly like an existing exchange. Unlike IEX’s speedbump, which caused a two-year licensing delay, MEMX will most likely employ a standard maker-taker model, with virtually nothing odd or controversial. While the other exchanges may complain about the added complexity of a fourteenth exchange, MEMX’s exchange application will be completely dull and boring, raising no flags with regulators. That will speed up approval and remove any possible SEC delays.

High Rebate

Once approved, MEMX, operating off the BATS playbook, will most likely employ the ‘Crazy Eddie’ “our prices are insane” pricing strategy: MEMX will provide a larger rebate than its cost to take liquidity. This will achieve two goals: first, it will provide an incentive for market makers to provide liquidity; and second, that incentive will be passed back into more aggressive pricing. While most of the high-rebate exchanges have super tiers of 32 mils (cents/share), MEMX will need to provide a higher rebate than 32 mils or provide more clients with access to the 32-mil top tier. Interestingly, these high rebates and the conflicts that it creates, is exactly what the buy-side is railing about, forcing the SEC to implement the new Access Fee Pilot, which I will discuss later.

To read the entire piece, click here

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CNBC Debuts Programming Dedicated to ETFs-Finally!

MarketsMuse coverage of the exchange-traded fund (ETF) industry began nearly ten years ago, and our senior curators have since been scratching their heads as to why CNBC, the retail investors’ most-watched business news network had never created dedicated programming to educate their viewers about ETFs, an asset class that has consistently grown (by as much as 20% YoY). How big is this market? Based on various metrics published by the assortment of ETF Issuers, more than $3 Trillion (with a “T”) of ETFs are held by US investors, the global market size is over $5 Trillion (with a “T”).

More telling, RIAs (Registered Investment Advisors) that manage money for retail investors now allocate well more than 50% of client money into these thematic funds. That said, CNBC–the business media channel that has become ubiquitous for its retail investor-targeted 12 hour+ daily coverage of stock market activity, interviews with fund managers, sell-side research analysts and public company CEOs have provided merely tangential insight to the ETF marketplace. Until now, that is.

Yesterday, CNBC premiered a new segment titled “ETF Edge” and hosted by commentator Bob Pisani. The premiere segment captured two particularly insightful ETF industry veterans; hedge fund manager Tim Seymour (who is also one of CNBC’s frequent market commentators) and Andy McCormond, Managing Director of ETF Execution for agency broker-dealer WallachBeth Capital, a boutique institutional brokerage whose thought-leadership on the topic of ETFs and better approaches to executing orders in ETF products has been embraced by a discrete universe of institutional investors and tens of dozens of RIAs for more than 10 years.

Hats Off to CNBC for shedding more light on an asset class that retail investors need to know more about.  Roll the opening show clip!

ETF Edge, January 23, 2019 from CNBC.

If you’ve got a hot insider tip, a bright idea, or if you’d like to get visibility for your brand through MarketsMuse via subliminal content marketing, advertorial, blatant shout-out, spotlight article, news release etc., please reach out to our Senior Editor via cmo@marketsmuse.com

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From The Halls of Montezuma-to the Floors of the NYSE

US Marine veteran of Operation Just Cause and Operation Desert Storm and veteran NYSE floor trader enlists with designated market-maker GTS with rank of Global Market Commentator

From the USMC to the NYSE, Mark Otto re-defines the phrase ‘veteran’ when considering his pedigree as a highly-decorated former US Marine and the 25 years of financial industry service he’s racked up since hanging up his gun belt. Former Marine Corporal Otto saw combat throughout his 4 years as an enlisted solider (first 1989 Panama Invasion “Operation Just Cause”and thereafter, Operation Desert Storm and then parachuted into the line of fire on the global financial industry’s most iconic battle field: the trading floor of the New York Stock Exchange. After three tours of duty serving under the commands of NYSE floor specialists Susquehanna Group, Knight Capital and J. Streicher, Otto will now be serving under a new command, he’s just signed on with the veteran-friendly NYSE Designated Market-Maker, GTS where Otto will have the rank Global Market Commentator.  In November, GTS announced they had secured a minority stake in veteran-owned investment bank and institutional brokerage, Mischler Financial Group

Excerpt from the Jan 17 ,2019 press release is below:

mark-otto-usmc-nyse
Mark Otto-from the USMC to NYSE

NEW YORK–(BUSINESS WIRE)–GTS, a leading electronic market maker across global financial instruments, today announced the addition of U.S. Marine Corps combat veteran and experienced equities trader Mark Otto as the firm’s first Global Market Commentator.

As Global Market Commentator for GTS, Otto will combine his specialty of trading American depositary receipts (“ADR”), algorithmic trading, market making and volatility trading with his experience trading in times of historic geopolitical events and market turmoil such as the 2008 Financial Crisis, the Flash Crash, the Greek Debt Crisis, Eurozone Debt Crisis and Brexit to provide market commentary on current trends and their impact on the securities markets.

“I am thrilled to continue my career on the NYSE with GTS,” Mark Otto said, “So much of the pricing of stocks results from international developments and interconnected global economies. It’s an honor for me to share my commentary and views as part of the GTS platform. The firm is a pioneer in bringing innovation to the marketplace and it is an incredible opportunity for me to be teaming up with such an important player in the global capital markets ecosystem.”

mark-otto-nyse
US Marine Corps Veteran and NYSE floor veteran Mark Otto

Between 1988 and 1992, Otto served under the 2nd Surveillance Renaissance and Intelligence Group based out of Camp Lejeune, North Carolina. During his military service, Otto saw combat during the Panama Invasion and Operation Desert Storm, as well as leading surveillance teams observing and securing U.S. boarders in support of Federal Law Enforcement agencies. Otto received over a dozen military decorations and achievements, including the Combat Action Ribbon with Gold Star, Joint Meritorious Unit Commendation and Airborne Jump Wings.

GTS is the largest Designated Market Maker (“DMM”) at the New York Stock Exchange (“NYSE”) and has an extensive track record of responsibly using best-of-class technology to bring better price discovery, trade execution and transparency to the markets. At the NYSE, GTS is responsible for the trading in more than 900 public companies that have a total market capitalization of approximately $13 trillion dollars. Listed securities include blue chip companies ranging from ExxonMobil (NYSE: XOM) and Ford (NYSE: F) to international companies such as Alibaba (NYSE: BABA) to leading global technology companies like Oracle (NYSE: ORCL) and AT&T (NYSE: T).

If you’ve got a hot insider tip, a bright idea, or if you’d like to get visibility for your brand through MarketsMuse via subliminal content marketing, advertorial, blatant shout-out, spotlight article, news release etc., please reach out to our Senior Editor via cmo@marketsmuse.com

To read the full press release, click here

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