The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
May 15, 2020
New York Stock Exchange to partially reopen May 26, with 'vital new safety measures,' president says (Bloomberg by Yun Li)
Trump farmer: America's food supply in danger if we don't use immigrant workers legally / There's a direct line between having guaranteed labor and being able to pivot to meet the changing needs of this new crisis (Fox Business by Fred Leitz)In the Matter of the Application of Securities Industry and Financial Markets Association for Review of Action Taken by CAT LLC and Certain Self-Regulatory Organizations (SEC Order)
How one South Carolina restaurant owner is thinking about reopening (CNBC by Amelia Lucas)
New York Stock Exchange to partially reopen May 26, with 'vital new safety measures,' president says (Bloomberg by Yun Li)
https://www.cnbc.com/2020/05/14/new-york-stock-exchange-to-partially-reopen-may-26-with-vital-new-safety-measures-president-says.html
As reported in party by Bloomberg's Li:
As reported in party by Bloomberg's Li:
The New York Stock Exchange will reopen its trading floor to some brokers on May 26, following two months of closure due to the coronavirus pandemic, according to president Stacey Cunningham.The NYSE will reopen its facility to "a subset of floor brokers" the day after Memorial Day with "vital new safety measures," Cunningham said in a Wall Street Journal op-ed on Thursday after the closing bell.
Wall Street Heavyweights Are Sounding Alarm About Stocks (Bloomberg by Katherine Burton, Melissa Karsh, and Sophie Alexander)
https://www.bloomberg.com/news/articles/2020-05-13/wall-street-heavyweights-are-sounding-alarm-about-stock-prices?srnd=premium
https://www.bloomberg.com/news/articles/2020-05-13/wall-street-heavyweights-are-sounding-alarm-about-stock-prices?srnd=premium
The Bloomberg article informs us in part that:
It's a notion catching on among Wall Street money managers. And it's coming as investors start to suspect that the Federal Reserve's support, as well as $3 trillion in Treasury stimulus, may not be enough to compensate for soaring unemployment, a wave of bankruptcies and no end in sight to the pandemic. Managers including Bill Miller, Paul Singer and Paul Tudor Jones have all voiced doubts about markets or the economy.
Bill Singer's Comment: Oh . . . it's a "notion catching on" among Wall Street's top money managers? Wow, what a wonderful bit of news. Who knew that so-called Wall Street Heavyweights are alarmed about investing in stocks? Apparently, this alarm-sounding in the form of a catching-on notion is not gaining a foothold among Wall Street's lightweights, bantam weights, or fly weights. How do we know that? Oh, you know, read the headline: It's only a notion among the heavyweights, whatever the hell that moniker actually means. By inference, Wall Street's lighter pundits must see a robust, surging stock market that is inviting to all investors. Yes, that's an example of my bitter, acidic sarcasm. Respectfully, did it really require Bloomberg to allocate three -- count 'em -- three writers to pen such nonsense?
https://www.foxbusiness.com/markets/post-coronavirus-morgan-stanley-goldman-sachs
As reported in part in the Fox Business article:
Big firms, meanwhile, are looking to reduce their real estate holdings and offices in high-density places like New York City because of fears of a second wave of the virus and to cut costs given the sky-high rents in Manhattan and the surrounding areas. Firms have begun to eye expanding investment banking and sales jobs in lower-density urban locals such as Denver; Jacksonville, Florida; Nashville, Tennessee; Austin, Texas; and Charlotte, North Carolina, financial services recruiters tell FOX Business.
It's "too early to write the epitaph" for office real estate, UBS analyst says (CNBC by Diana Olick)
https://www.cnbc.com/2020/05/14/coronavirus-too-early-to-write-the-epitaph-for-office-real-estate-ubs-analyst-says.html
https://www.cnbc.com/2020/05/14/coronavirus-too-early-to-write-the-epitaph-for-office-real-estate-ubs-analyst-says.html
Actually, it's not too early to write the epitaph. On the other hand, I wouldn't pick out a heavy stone tombstone and start all the carving until you have the actual date of death. As CNBC's Olick notes in part:
In a new forecast, CBRE predicts that after hitting $35.66 per square foot per year in the first quarter of 2020, the average office rent will hit a low of $33.23 in the fourth quarter and then gradually recover back to current levels by the first quarter of 2022. The average vacancy was at 12.3% in the first quarter of 2020. CBRE sees that rising to a high of 14.9% by first quarter of 2021, then gradually recovering to current levels the following year.
UPDATE: Federal Court Orders Rare TRO In Favor Of Terminated Rep Against Investacorp
(BrokeAndBroker.com Blog)
(BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/5209/Investacorp-James-MDLA/
Ah yes . . . the old Wall Street game of hardball! Time and time again during my decades in the biz I've seen this particular bit of nasty gamesmanship. If you believe James' version of events, he was being strong-armed by Investacorp to sell his book of business on less than favorable terms. If you believe Investacorp's version of events, the firm simply thought it was acting in the best interests of James' clients and out of concern for some pending regulatory issues. All of which tends to devolve into we can do this the easy way or the hard. Funny how it's almost always the latter option.
https://www.sec.gov/litigation/complaints/2020/comp-pr2020-111-applied.pdf
In a Complaint filed in the United States District Court for the Southern District of New York
Applied Biosciences Complaint (SDNY) https://www.sec.gov/litigation/complaints/2020/comp-pr2020-111-applied.pdf, the SEC charged Applied BioSciences Corp.with violating antifraud provisions of the federal securities laws.
Separately, in a Complaint filed in the United States District Court, TGP/Singerman Complaint (MDFL) https://www.sec.gov/litigation/complaints/2020/comp-pr2020-111-turbo.pdf , the SEC charged Turbo Global Partners and its Chief Executive Officer Robert W. Singerman with violating antifraud provisions of the federal securities laws. As alleged in part in the SEC Release:
According to the SEC's complaint against Applied BioSciences, filed in federal court in the Southern District of New York, the company issued a press release on March 31 stating that it had begun offering and shipping supposed finger-prick COVID-19 tests to the general public that could be used for "Homes, Schools, Hospitals, Law Enforcement, Military, Public Servants or anyone wanting immediate and private results." The complaint alleges that contrary to these claims, the tests were not intended for home use by the general public and could be administered only in consultation with a medical professional. The complaint further alleges that Applied BioSciences had not shipped any COVID-19 tests as of March 31, and its press release failed to disclose that the tests were not authorized by the U.S. Food and Drug Administration.The SEC's complaint against Turbo Global and Singerman, filed in federal court in the Middle District of Florida, alleges that the company issued false and misleading press releases on March 30 and April 3 regarding a purported "multi-national public-private-partnership" to sell thermal scanning equipment to detect individuals with fevers. According to the complaint, the company claimed in its press releases that this technology could be instrumental in "breaking the chain of virus transmission through early identification of elevated fever, one of the key early signs of COVID-19." As alleged, the press releases also included statements, attributed to the CEO of Turbo Global's supposed corporate partner in the partnership, that the technology "is 99.99% accurate" and was "designed to be deployed IMMEDIATELY in each State." In fact, the complaint alleges, Turbo Global had no agreement to sell the product, there was no partnership involving any government entities, and the CEO of Turbo Global's supposed corporate partner did not make or authorize the statements attributed to him. According to the complaint, Singerman drafted the releases, which he knew to be false. The SEC charged Singerman with fraud in 1999 based on his fraudulent sale of securities through a network of boiler rooms, and obtained a permanent injunction against him.
https://www.sec.gov/litigation/litreleases/2020/lr24818.htm
In a Complaint filed in the United States District Court for the District of Connecticut
https://www.sec.gov/litigation/complaints/2020/comp24818.pdf, the SEC charged former Sonic Cavitation LLC Chief Executive Officer/General Counsel Ronald Swanson with violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. The SEC ordered that Swanson be forthwith suspended from appearing or practicing before the Commission pursuant to Rule 102(e)(2) of the Commission's Rules of Practice, based on his disbarment from the District of Columbia bar. As alleged in the SEC Release:
https://www.sec.gov/litigation/complaints/2020/comp24818.pdf, the SEC charged former Sonic Cavitation LLC Chief Executive Officer/General Counsel Ronald Swanson with violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. The SEC ordered that Swanson be forthwith suspended from appearing or practicing before the Commission pursuant to Rule 102(e)(2) of the Commission's Rules of Practice, based on his disbarment from the District of Columbia bar. As alleged in the SEC Release:
[I]n late 2013 and early 2014, Ronald Swanson, then a resident of Connecticut, falsely told investors that his employer, Texas-based Sonic Cavitation LLC, was in discussions with a publicly-traded oil and gas company for a large order of Sonic Cavitation units, which supposedly implemented a liquid purification technology. According to the SEC's complaint, Swanson also falsely told current and prospective investors that the oil and gas company was poised to acquire a 10%-12% equity interest in Sonic Cavitation LLC, despite knowing that the oil and gas company's staff did not consider Sonic Cavitation's technology to be viable. Further, Swanson allegedly misrepresented the liquid purification technology's testing history, capabilities, and performance in real-life applications, such as falsely stating that an independent research and development company had verified the technology's practical use, when in fact the research and development company found that the technology did not work as Swanson claimed.
In the Matter of the Application of Securities Industry and Financial Markets Association for Review of Action Taken by CAT LLC and Certain Self-Regulatory Organizations (Order Granting Request to Withdraw Application for Review and Dismissing Review Proceeding, SEC, ' 34 Act Rel. No. 88879; Admin. Proc. File No. 3-19766 / May 14, 2020)
https://www.sec.gov/litigation/opinions/2020/34-88879.pdf
https://www.sec.gov/litigation/opinions/2020/34-88879.pdf
In response to the settlement of various Consolidated Audit Trail system issues, SIFMA attached a stipulation whereby the parties dismissed the proceeding; and, accordingly, SFIMA withdrew its application and Motion to Stay, and requested that this proceeding be dismissed. The SEC so Ordered.
https://www.foxbusiness.com/economy/michigan-farmer-immigrant-farmworkers-feed-america
In this Fox Business "Opinion" piece by Fred Leitz, a farmer, a past president of the National Council of Agricultural Employers, who states in part that:
Most farms these days falter or fail because immigration restrictions and a loss of interest in farm work among Americans has drastically decreased the labor supply. That's why, when my first group of migrant workers bounded off the bus wearing facemasks in early April, I gave them a warm welcome and thanked them profusely for showing up to work.Many were happy for a job, but apprehensive about traveling to Michigan, now a COVID-19 hot spot.I'm a conservative Republican who voted for Trump, and I firmly believe that we need a streamlined immigration system that welcomes foreign-born visa workers where needed.
How one South Carolina restaurant owner is thinking about reopening (CNBC by Amelia Lucas)
https://www.cnbc.com/2020/05/14/how-one-south-carolina-restaurant-owner-is-thinking-about-reopening.html
As CNBC's Lucas notes in part:
The state's recommendations for reopening include using paper menus, seating no more than eight customers at one table, spacing tables six to eight feet apart and taking employees' temperatures before they start a shift.Lata and his team are drawing up floor plans and using measuring tape to ensure that tables are far enough apart. But they face many more decisions, like if they should take reservations or how to encourage customers to act responsibly, even when drinking alcohol. They're even considering adding a second door to FIG.
McDonald's reportedly sent franchisees a 59-page guide for reopening dining rooms (CNBC by Amelia Lucas)
https://www.cnbc.com/2020/05/14/mcdonalds-reportedly-sent-franchisees-a-59-page-guide-for-reopening-dining-rooms.html
Apparently CNBC's Lucas has a niche market in reporting about restaurant reopenings. As Lucas notes in contrast to the relatively modest plans of smaller restaurants, McDonald's has embarked upon a grandiose 59-page reopening strategy.
Bill Singer's Comment: During the Arab Oil Embargo of 1973 (another time when life as we knew it seemed to be coming to an end), I worked as a night manager of a Burger King in Brooklyn, NY. After honing my burger making, shake mixing, fries frying skills to perfection, I launched upon a now-legendary career as a brilliant Wall Street lawyer. You may pooh-pooh my restaurateur credentials but, by way of analogy, I did need to demonstrate competency in putting together an order "your way" within a few seconds, which included the proper paper folding and boxing and subtle up-sell suggestion. You don't think that Burger King would unleash untrained amateurs upon the burger eating public, do you? The training that I received as a Burger King manager was every bit as rigorous as my three years of law school, but for that whole taking and passing the Bar thing.
In any event, the CNBC article resonates with me but for its reference to reopening "dining rooms." Not to be too snarky here but I would hardly deem the conglomeration of tables and affixed chairs to rise to the level of a dining room. If you do, then let's just agree to disagree.
Thousands of folks are dying of COVID19 each day but in spite of that horror, McDonald's presses on, fights the good fight, stays the course, and relentlessly manages to prepare a 59-page guide for reopening its, umm, okay, I'll go with it for now: dining rooms. There are a lot of McDonald's executives likely working at home and in desperate need to justify their jobs; all of which would explain how a simple thing like "put key in door, twist, unlock, open, walk in, turn on lights, turn on equipment, sanitize everything you can see, and make sure everyone in the place has a mask on" ballooned into 59 pages. Assuming that there are some in-house McDonald's lawyers also working from home, many pages of disclosures, disclaimers, footnotes, and warnings were likely added to the original Discussion Draft. Still -- I'm sort of surprised that instead of sending out that behemoth guide, McDonald's didn't simply fire up its old Hamburger University, put the whole shebang online, and issue some idiot "Reopening Dining Rooms" Certificate, which all these franchise operations seem to love to design, print, and issue. Sadly, when McDonald's finally reopens its dining rooms, there won't be any beef, and you'll likely be eating a breaded air-ball or a textured soy protein burger (and lovin' it).
Adding to the dining-room experience, you may encounter a bunch of ardent militia members in Hawaiian shirts toting AR-15s and waving a "Live Free or Die" flag. The apparent leader of this armed band of lunch-goers will look intently at the signage about McDonald's Mocha and Caramel Frappes, but then complain how he'd love to order the concoction but he's lactose intolerant and is only drinking soy milk these days, which will prompt him to ask the server behind the counter if they can make him a Frappe without the dairy whipped cream. She will say "no," but ask if he'd like the Frappe without the whipped cream. To which he'll say "what's the point?" Then she will try to move things along and ask him if he would like to order water, iced tea, or soda. In response, he will ask if they have Mountain Dew because that's what militia folks love to drink. Politely, she will offer to sell him a "Sprite." Sprite? Sprite ain't Mountain Dew, he will impetuously say while fingering the safety of his AR-15. The server will then reach behind her back and pat the Glock that she has hidden away for these moments. She's not supposed to be armed behind the counter but, hell, customers aren't supposed to enter fast food dining rooms with automatic weapons. Then again, the Second Amendment does say that ""A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed." And the guy ordering is Militia, and if he takes his Metamucil like he's supposed to, and if he avoids too much dairy, well, no question about it, he is well-regulated. Ultimately, the militia guy will order a Coke. Towards the end of his meal, the militia guy may take a sip of Lenny's (the guy carrying the "Live Free or Die" flag) Caramel Frappe but then complain that he prefers the Mocha. Lenny will call the guy a Commie.