Here is some further information on UNREGISTERED Stock trading. Some of the large brokerages are trying to setup a system to trade these shares. Presently it is done thru private trades and dealer to dealer trades. Mostly offshore > Again I am NOT making this stuff up...
Trading system is planned for unregistered shares
Elizabeth Hester Bloomberg News
Aug 16, 2007
Citigroup Inc. and three of the largest U.S. brokerage firms plan to create a trading system for unregistered securities, joining rivals including Goldman Sachs Group Inc., as more companies seek to avoid regulations by raising money privately.
Lehman Brothers Holdings Inc., Merrill Lynch & Co., Morgan Stanley and Citigroup expect to begin operating the Open Platform for Unregistered Securities or OPUS-5 in September, the companies said in a statement Wednesday. OPUS-5 will allow trades, track the number of shareholders and execute transfers in securities sold. The Bank of New York Mellon will administer the system.
"We're trying to create as much liquidity as we can for our issuers and our investors," John Chirico, co-head of U.S. equity capital markets at Citigroup, said in an interview Wednesday. "It's meant to be open and not an exclusive arrangement to keep other firms out."
Companies such as Oaktree Capital Management LLC and Apollo Management Group LLC, the private-equity firm run by Leon Black, are trying to avoid the delay and expense of financial reporting rules, including the 2002 Sarbanes-Oxley Act, by raising capital through the sale of unregistered securities to private investors. As demand for private placements expands, Goldman, FBR Capital Markets Corp., JPMorgan Chase & Co. and Bear Stearns & Cos. started markets to capture fees from trading the securities.
Securities offerings under the so-called 144A rule qualify as private placements when they're sold to no more than 499 institutional buyers, each with at least $100 million in discretionary assets.
So far this year, publicly traded U.S. companies have raised $45.2 billion from 144A sales, according to data compiled by Sagient Research Systems Inc. That compares with $48.6 billion for all of last year and a record $73.6 billion in 2003, Sagient data show. The San Diego-based company doesn't track sales by private companies.
Private placements exempt companies from U.S. Securities and Exchange Commission regulations such as the Sarbanes-Oxley Act that are designed to inform investors about company operations and protect them from fraudulent accounting. The placements are already common for sales of convertible and high- yield bonds.
OPUS-5 intends to list companies of varying size and across different industries, said Dan Simkowitz, head of equity products at Morgan Stanley. OPUS-5 is also in talks with other investment banks about joining its system, Chirico said.
Nasdaq Stock Market Inc., the second-largest U.S. equity exchange, will list more than 600 securities on its revamped Portal private-placement trading system, which began operations Wednesday. Nasdaq began Portal in 1990 and received SEC approval to operate the automated system on the Internet last month.
Archer Daniels Midland Co., Germany's Adidas and Australia's Telstra have raised money this year on the Portal system, according to Nasdaq. Portal disseminates quotes and real-time information on trades for thousands of securities, according to data on the exchange's Web site. The system doesn't match trades electronically, leaving brokerages to complete transactions.
The OPUS-5 system is designed to track shareholders and complete trades, which could complement a system like Portal, Simkowitz said.
Copyright C 2007 Deseret News Publishing Co.
Provided by ProQuest Information and Learning Company. All rights Reserved
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