Archive for May, 2007
The U.S. Securities and Exchange Commission today announced that it will ask a court to allow four months for investors and their brokers to respond in light of a court decision affecting an estimated one million fee-based brokerage accounts.
Commission Seeks Time for Investors and Brokers to Respond to Court Decision on Fee-Based Accounts
The biggest news in the investment world broke on March 30, 2007. On that date the court threw out an SEC rule that allowed brokers to provide investment advice through fee-based accounts without being treated as investment advisers. In a 2-1 decision, the court said that the SEC had exceeded its authority in adopting the rule.
The US securities regulator had previously exempted fee-based brokerage accounts from registering as investment advisory accounts, a decision successfully challenged by the Financial Planning Association of Denver.
The number of investors that are affected by this court ruling is not known but estimates place their assets in the $277.4 billion area. These investors will have to look carefully at their investments and decide which way to go with them.
The fee-based accounts have been very good in that the customer pays a flat fee (average of 1% of assets value) for the account. This sort of account removed the conflict of interest that can exist in a transaction-based account. The conflict comes in because the broker of such an account makes money everytime a customer buys or sells stock. This can lead to a situation where the broker selects stocks for the customer that are based on enriching himself rather than the customer as well as constant trading to insure a constant stream of income from transaction fees.
Even though the SEC has given up the fight others are still hoping to reverse the court’s desicion or even get Congress to change the laws on the books. The investment advisors say that the SEC has been allowing brokers to act as investment advisors without the proper credentials while the brokers say it’s just a bunch of extra paperwork.
The big brokerage houses do have a choice to make. Do they fight this or do they get their people properly trained to be investment advisors?
Recently, enGadget published an email that was sent to them from an Apple employee. This email had originated somewhere on the Apple email server and enGadget decided to run with it. Within minutes of publishing the news of a suspected iPhone delay the Apple stock dropped, knocking four billion dollars in market cap off of Apple stock. The stock did rebound over the course of the afternoon. With the FCC news of the iPhone’s approval it climbed even higher.
This leads me to wonder if enGadget was being used as an unwitting accomplice in an Internet stock pump-and-dump scheme. Or would this be a dump-and-pump scheme?
Think about this for a minute. You have inside information about Apple and know that the FCC is about to announce approval for the iPhone but, the stock is too high for you to properly profit off of it. Why not send out an email telling everyone that the iPhone is going to be delayed? Then, after the stock drops, you buy up a whole bunch! Any delay news would likely be refuted by Apple before the day ends, at which point the stock will rise again. Couple that with the expected approval nod from the FCC and you have a suspicious looking example of a stock fraud.
Now, I’m not saying Apple is behind this as it could have been done by someone who hacked into Apple’s mail server.
Between 12:00 PM and 12:05 PM on May 16, 2007 Apple stock went from 107.79 to 103.42 with a volume well over three million shares! By Friday evening the stock had climbed to 110 on the good news from the FCC. With the right timing someone could have just made themselves almost $7 per share in profit.
Just the other day I got a very interesting stock tip via my fax machine. I say interesting because this one was not formated in the usual manner and it did not make any claims as to the projected value of the stock by the end of the week. It just gave the stock symbol and information on their product. Intrigued I Googled them and found their website.
The picture you see above is of their prototype. It’s just an artists rendering at this point because they have not actually built one yet.
The Skyflyer (SF MK II) is a VTOL (vertical take-off and landing vehicle). It is 4.26m long, and 4.26m wide; its overall weight is about 700kg. Four horizontal rotators are individually driven redundantly by established, often used special aircraft engines. The Skyflyer has a horizontal speed of 0 to 60km/h and a rate of ascend of 0.1m/sec. Its general flight characteristics are similar to that of helicopters, while its corning capability is even more precise.
source: Skyflyer web site
As I read more and more of the information on their website I can’t help but think, “why would anyone invest money in this?” It looks like they are planning to use this vehicle in a closed structure as an amusement ride. They do talk about eventually having a vehicle for personal use outside of a flight dome but that is probably years away and would be subject to the same regulations as a private plane or helicopter.
They also mention using it as a rescue vehicle but, with the props being where they are and the limited amount of cabin space, I just can’t see why someone would choose to use this rather than a full size rescue helicopter.
Like many exotic vehicles it may find a home with some rich collectors who just want to own one. With all the licensing sure to be required to own and operate one of these I expect most folks will just stick with private planes and helicopters.
Just how much dust will those four props kick up? Do you really think your neighbors in the cul-de-sac are going to like it when you fire up those four props and send dirt and debris flying all over the place? Do you think local government will allow you to park this thing in your driveway?
I do give them some props for moving forward with the idea of a personal aviation device but I just don’t think this one is going to fly in the public sector.
I did not see any information on a maximum elevation ceiling for this vehicle and they list steering as “GPS” which tells me nothing. I see no obvious method of moving the vehicle in any direction other than up and down so I’m going to assume that turning involves slowing down the roters in the direction you want to turn and “dipping” the vehicle.
The stock SKFL is currently sitting at $0.57 per share and a hired analyst is saying the stock should pass $1 before the year is out.
The press reports I am reading indicate that the company is getting all their ducks in a row and taking on good engineers to work on the project. If they get the capital they need this project may take off. As to it getting past the prototype stage and having an actual park built for the vehicle to operate in is another question entirely.
I will be watching this one, if not no other reason than the fact that a personal flying vehicle interests me.
Joost has just announced that five venture capital groups have invested a combined $45 million in the company. Each party has acquired a minority stake in the company. This funding will allow Joost to continue with product development and other needs.
For those who do not know, Joost is a video over the Internet company. They are most often compared to YouTube, which is now owned by Google.
“This funding represents a tremendous vote of confidence in Joost’s platform. We’ve carefully selected these investors from a variety of interested parties, as they are best-in-class in their respective arenas and bring unique assets to Joost that will enable us to significantly accelerate growth and development of the Company.”
said Janus Friis, co-founder of Joost.
Investors
- Index Ventures
- Sequoia Capital
- Li Ka Shing Foundation
- Viacom
- CBS Corporation
Seeing the likes of Viacom and CBS on this list will only further the problems YouTube is having with these two companies. As you may recall, several media companies are currently sueing YouTube to have their content removed from the video sharing service. As investors and content partners in Joost I don’t see any reason (short of Joost failing) for these two companies to let up on YouTube in regards to their content.
Media contributions from CBS and Viacom
- CSI
- Survivor
- NCIS
- Numb3rs
- Fat Actress
- The CBS Evening News with Katie Couric
- Face the Nation
- The Early Show
- 48 Hours
- CBS Sunday Morning
- College Football Highlight Show
- NFL Today Hot Topic
- Game of the Week
- One2One
- Go Pro or Go Home
- Laguna Beach
- Beavis and Butthead
- Real world
- Punk’d
- My Super Sweet Sixteen
- Stella
- CCP’s
- Freak Show
Paramount Pictures (part of Viacom) will also be providing full length feature films from its catalog (old and new movies).
Things are really heating up in the online video market. Not only do we have Joost and YouTube but even the phone companies are launching IPTV services. If Joost can land top rated shows from the major networks and provide a reliable service (and a way to get the content to the TV without being a major pain) they can rule the online video marketplace.
I have a Joost invite myself but, my computer does not have the capability to run their client.
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