“Friend” for Funding: Are social networks the future of startup funding?

by Matt Diamond November 10 2011, 16:40
Soon, entrepreneurs may be able offer their Facebook “friends” and Twitter “followers” more than just virtual friendship and updates on what they had for breakfast. They may soon be able to offer equity stakes in their business. In an increasingly rare instance of bipartisanship, last Thursday (Nov. 3) the House passed both the Entrepreneur Access to Capital Act (“Entrepreneur Act”) and the Small Company Capital Formation Act (“Small Company Act”), each aimed at spurring small business growth through the method of “crowdfunding,” “a form of capital raising whereby groups of people pool money, typically comprised of very small individual contributions, to support an effort by others to accomplish a specific goal.” If approved by the Senate, the bills would allow entrepreneurs to use online social networks to solicit small equity investments in enterprises, a capital raising strategy that is illegal under current securities law. However, some warn that, if passed, the legislation will increase the risk of securities fraud and speculative risk to investors among other things. [More]

Flash Trading: The informational age gone awry?

by Jarrett Szczesny October 24 2011, 10:05
The historical purpose of the stock market, serving as a method for companies to affordably raise capital, is fading quickly. The proliferation of supercomputer trading algorithms and complex derivatives (e.g. Synthetic Collateralized Debt Obligations) has given rise to an age of increasingly complex trading methods. One of the foremost advances is the speed of trading, seen predominantly in high-frequency methods. The expansion of bandwidth and connection speeds has enabled traders to execute trades in as little as one-millionth of a second, a far cry from the historical telephone relays to traders in the pits. However, even with the public outcry for more transparency within the financial markets, little is known about the actual effect high frequency trading has on the markets and the everyday investor. [More]

Weekend at Bernie's

by Patrick Schuette February 18 2009, 01:32
I. Introduction

The past few months have seen numerous financial frauds uncovered. Two of these frauds are particularly noteworthy. On December 11th, 2008, the largest of these financial frauds was unveiled when Bernard Madoff admitted to a $50 billion fraud through his firm, Madoff Securities.[1] On February 17th, the Securities and Exchange Commission (SEC) filed charges against Stanford International Bank relating to an allegedly fraudulent $8 billion certificate of deposit (CD) scheme.[2] Other alleged frauds have come to light, often in highly publicized and dramatic fashion.[3] These frauds suggest something is amiss in the markets. [More]

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