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WeWork drama continues, Hedge fund fees, AI on Wall Street

Sat, 10/05/2019 - 7:28am  |  Clusterstock

 

Hi everyone,

I'll take a break from WeWork this week (although we do have a lot of good stories out this week including this bombshell) to focus on a new and growing area for us — the future of wealth management. 

Today, we published a big scoop that Bank of America's massive wealth arm, Merrill Lynch, has hiked trainee financial advisers' starting salaries by $10,000. In an interview with Merrill president Andy Sieg, he told BI wealth reporter Rebecca Ungarino that the firm plans to hire more than 1,500 financial adviser trainees this year, while scaling back on experienced hires. 

Why is this such a big deal? 

The firm is aiming to stay competitive as the war for financial adviser talent ratchets up in a tight US labor market — and around a third of advisers across the industry are expected to retire in the next decade. 

Wells Fargo's adviser arm also told us it's launched a new pitch to draw new talent. 

It's been tough for the wealth industry to convince new college grads to join their ranks. Young people working in wealth tell Business Insider that the allure of lucrative fields like tech, the daunting challenge of drumming up business as a newbie, and lingering unease with the industry for those who came of age during the financial crisis help explain why the jobs may have seemed less appealing. 

Yet the future of the industry to find the next generation of top advisors is crucial. The average adviser's age is around 52, according to Cerulli Associates data, and many are seen retiring over the next decade. Only around 9% are under 35.

Separately, we've also been writing a lot about the race to zero-fee commissions among the online brokers in the last few days. Interactive BrokersCharles SchwabTD Ameritrade, and E-Trade all moved to eliminate fees for US-listed trades in late September and early October, in turn wiping out huge chunks of the companies' market caps.

There are a number of important factors influencing the choice to dump fees, Rebecca reports. Legacy brokers and big banks alike are rushing to compete with digital entrants for younger users. Meanwhile, US interest rates are falling at a faster clip than analysts had earlier expected. 

But while the e-brokers' stock prices are feeling pain, Brett Redfearn, the SEC's trading and markets head, praised their decision to slash fees during an investor conference in Washington this week.

"It is always good to see competition bringing down prices for investors," Redfearn said. 

Stay tuned for more from BI as we continue to follow this trend and let us know what else we should be watching in the wealth space. 

Thanks for reading, 

Olivia

Wall Street gave Adam Neumann up to $500 million he was going to pay back after WeWork's IPO. Now that the offering is pulled, banks are scrambling to hammer out a solution.

WeWork co-founder Adam Neumann is working with banks to consider new terms for a loan that he took out before the company filed to go public, according to people with knowledge of the matter. 

Neumann has already drawn down $380 million from the loan. He can no longer pay the loan with proceeds from selling WeWork shares publicly, since the co-working company has abandoned its IPO for now. 

Neumann may be required in the talks to put up some of his properties or other assets as collateral for the loan, one of the people said. 

READ MORE HERE »

Citi has quietly undergone a massive restructuring over the past year. Here are the businesses it overhauled and the executives who departed.

Citigroup declared in 2017 its post-financial crisis restructuring was complete, but over the past 18 months the bank has quietly, slowly undergone another significant overhaul.

A little over two years after its investor day, the firm and leadership surrounding CEO Mike Corbat looks vastly different. Just five of the 14 executive officers on Corbat's team remain.

In a recent meeting with bank analysts, Citi executives signaled that the slow-burn restructuring may be nearing completion.

Here's a recap of businesses Citi overhauled and the executives who've departed over the past 18 months.

READ MORE HERE »

Hedge-fund investors want a deal on fees. Managers don't start negotiating until the check hits $120 million.

The hedge-fund industry's notoriously high fees have been pushed down as managers have been more willing to negotiate.

But talks start only with the guarantee of a big check, according to data from eVestment. To lower management fees, a $119 million check was required on average. To cut performance fees, the cost was even higher — $133 million. 

READ MORE HERE »

Wall Streeters say AI is going to disrupt their business more than any other tech. Many big investors are getting left behind.

A recent survey conducted by the research firm Greenwich Associates found that only 23% of hedge funds and asset managers are using artificial intelligence on their trading desks.

That's compared to 63% of banks and 60% of trading venues using the cutting-edge tech.

As hedge funds and asset managers face shrinking fees, the cost required to internally build AI tools is viewed as too high. 

READ MORE HERE »

Saba Capital is targeting a unit of Legg Mason in an activist campaign. Another Legg Mason business stands to profit if it's successful.

Boaz Weinstein's Saba Capital, a $1.7 billion hedge fund, has taken activist positions in closed-end funds run by large asset managers like BlackRock and Neuberger Berman with the hopes that new board members will increase the price the funds trade at. 

Saba is targeting two closed-end funds run by Western Asset Management, which is owned by the $750 billion manager Legg Mason. 

Legg Mason, however, is also backing Saba in its fight against its own asset manager, thanks to its ownership of EnTrust Global, a $20 billion fund of hedge funds and one of Saba's biggest investors. 

READ MORE HERE »

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Merrill Lynch hiked starting salaries for trainee advisers by $10,000 and is taking on 1,700 newbies so far this year. We have the details. (BAC)

Sat, 10/05/2019 - 7:24am  |  Clusterstock

  • Bank of America's massive wealth arm has hiked trainee financial advisers' starting salaries by $10,000. 
  • "We're trying to do a better job communicating what a career as an adviser looks like, and what it's like getting started," Merrill Lynch Wealth Management head Andy Sieg told Business Insider.
  • Merrill has hired 1,700 financial adviser trainees so far this year. It's retreated from making experienced hires.
  • It's also deployed 75 performance managers around the country to coach new advisers, tracking things like how many meetings they have with potential clients.
  • The war for young adviser talent has ratcheted up in a tight US labor market — and around a third of advisers industry-wide are seen retiring in the next decade. 
  • Visit BI Prime for more stories.

Bank of America's Merrill Lynch Wealth Management has sweetened starting salaries for trainee financial advisers, hired 1,700 newbies so far this year, and deployed performance managers around the country to coach them.

It's all part of the firm's push to draw new talent for overseeing its some $2.4 trillion in client balances as an adviser retirement cliff looms.

We spoke with Merrill Lynch Wealth Management President Andy Sieg about how the firm has had to change up its playbook for hiring and training future advisers to add to its nearly 15,000-strong "thundering herd." 

Adviser demographics are "one of the realities of the wealth management industry that has not received a lot of attention," Sieg said, and firms need tackle how to position the next generation.

Merrill hiked starting salaries for trainee advisers by some $10,000 six months ago — the average is now $65,000, plus performance hurdles to bring total pay above that base. The firm's broader market and competitive pay practices are reviewed on a continuing basis. 

When asked how that salary stacks up with other wirehouses, Sieg said: "I think it's in the zone."

Honing the pitch is critical, especially for big banks looking to wealth to balance more volatile activities like trading.

Young people working in wealth tell Business Insider that the allure of lucrative fields like tech, the daunting challenge of drumming up business as a newbie, and lingering unease with the industry for those who came of age during the financial crisis help explain why the jobs may have seemed less appealing. 

To be sure, Merill is not the only wirehouse — the term for big, full-service broker-dealers — looking at that pool. For one, we spoke with Wells Fargo Advisors last month about coaching, outreach, and client handovers. 

Read more: Wells Fargo has seen 1,000 financial advisers depart since its sales scandal broke in 2016. Here's how it's fighting back to retain talent and attract young hires.

While Merrill has a training program that dates to the 1950s, today it has moved beyond simply instructing people to sell stocks and bonds. It focuses on financial planning and also selling broader offerings like mortgages from Bank of America, which bought the brokerage during the depths of the financial crisis. 

Still, Sieg said graduation rates from Merrill's trainee program were "not as high as we would like."

Over the past nine months it deployed 75 performance managers across the US to be more hands-on. That includes tracking things like  meetings and presentations with potential clients. The firm does not release trainee graduation rates.

When it comes to experienced advisers, Sieg said it's doing limited recruiting, but "it's pretty narrow, and the economics are very different than they used to be." 

In that respect, Merrill is focused on advisers from regional firms and independents who have been in the business for roughly two to eight years. They get a three-year guaranteed salary, and then are put on a performance-based payout grid.

Merrill had 14,690 financial advisers at the end of June, according to filings, down from 14,820 a year earlier. That excludes consumer banking advisers. The firm's total wealth advisers, including FAs, were 19,512 — up from 19,350 in 2018. Productivity per person has edged up meanwhile.

Trainee hiring at 'real scale'

While the firm has retreated from experienced hires to focus on making existing advisers more productive, Sieg said hiring is happening at "real scale" for its financial adviser development program. Merrill has brought on 1,700 new advisers this year through the third quarter for its training program.

It has some 3,500 trainees in its multi-year program overall. Through the third quarter, it hired 100 more advisers than the same time last year. 

Merrill sees a team environment with experienced advisers as part of setting them up for success. 

"We've moved well beyond the day of a sole practitioner in our business. Eighty percent of the advisers at Merrill Lynch today are on teams," he said. That gives people access to a relatively wide customer base, but means they also need to specialize skills quickly — in investment management, planning, or business development, for example. 

That usually happens by trainees' third or fourth year. "It becomes more important at that point in your career because now you don't just have 10 clients. You may have 50 clients," Sieg said. 

Read more: UBS Americas private-wealth head says he thinks losing a 'few hundred' advisers would not be a bad thing, and is looking at how robos can help keep the bank's richest clients

'Support and discipline'

To be sure, the business is a "a very challenging career path," Sieg said, and a successful adviser needs a range of skills to stand out in a crowded field.  

Merrill is trying to tackle attrition at multiple points. Sieg said there's a percentage of dropouts from people who realize one year in that they didn't "understand what this career was all about."

"We're trying to do a better job communicating what an adviser's career looks like, and what it's like getting started," he said.

A second dropout wave comes from failing required licensing exams to buy and sell securities, and the firm is looking to tools like self-diagnostics to help people pass.

Then comes learning the client service aspect, which was where the firm thought it could take it to the next level. It has been using technology and week-long group sessions around the country to bring trainees together.

But it also realized that senior field managers, who also oversee things like compliance and supervision for existing advisers, needed more help with young talent. 

It has been deploying 75 managers focused solely on the trainee program, which Sieg said added "a sense of both support and discipline." That hiring was rolling and only recently wrapped up. 

Read more: Morgan Stanley's wealth management arm is now the most profitable it's ever been. Wall Street is already questioning how long that can last.

Retirement cliff

Wealth management overall drew roughly 20,000 new trainees in 2018, according to research firm Cerulli Associates, an 11% drop from 2017. Around three-quarters of trainees failed out of the industry — encompassing wirehouses, independent registered investment advisers (RIAs), and others not including pure robo-advisers — in-line with recent years.

"Clients worry about — what if something happens to the financial adviser that I've gotten to know over the years, and I've grown to trust; if he or she retires?" Sieg said. 

The majority of advisers industry-wide at end-2017 were between 55 and 64, according to Cerulli. Only around 9% are under 35.

"New advisers joining our firm 30 years ago couldn't have imagined the breadth of capabilities that we have today," Sieg said. 

Join the conversation about this story »

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In #Nigeria Purchase your vehicle spare parts at @ikokuonline

Sat, 10/05/2019 - 6:58am  |  Timbuktu Chronicles
Co-Founded by Fortune Bekee:
Ikokuonline is the No.1 online shop for your car batteries, tyres, car parts and accessories in Nigeria.via

The flopping of the IPOs: Tech's biggest investors came to San Francisco for a major startup conference, and one topic stole the show

Sat, 10/05/2019 - 6:30am  |  Clusterstock

The Disrupt conference in San Francisco, organized by Tech Crunch, is a longstanding showcase for cutting-edge startups and products. But the star of this year's show was not a buzzy new app for swapping selfies or a new cloud platform; it was an arcane process for companies to sell their stock to the public. 

The so-called direct listing was inescapable during the three-day conference, debated on stage by venture capital investors and founders, and discussed in the halls by the software developers, journalists and other guests.

With the conference taking place just days after WeWork shelved its highly-anticipated initial public offering, the focus on going public — a celebrated milestone in the startup world — was not entirely surprising. And in the wake of a string of disappointing IPOs this year, from Uber and Lyft to Peloton, there was a palpable need among the guests to commiserate about the state of affairs, prognosticate about the future and find someone, or something, to blame.

Some VCs at the event were quick to point the finger at financial institutions like JPMorgan and Goldman Sachs — these banks overhyped companies like Uber and Lyft, they argued, running up private valuations so much ahead of the IPOs that there was nowhere for them to go on the public markets but down. 

For many of the VC investors on hand, the remedy was simple: a direct listing, that sidesteps the traditional, banker-controlled IPO process.

"As someone who invests in companies that are upending the status quo, there is something innately appealing about a financial vehicle, an instrument, that is upending how things have been done for a long time," said Spark Capital's Megan Quinn, during a panel.

"Rather than having underwriters, lineup investors set the price themselves, you just let the market have at it and come what may," Quinn said.

In all, direct listings were discussed in at least three major panels throughout the first two days of the Disrupt conference. 

What is a direct listing, anyway?

In a direct listing, a company simply lists its shares on a public exchange and the stock begins trading. Unlike in an IPO, there is no bank underwriting the offering, setting a price and selling it to institutional shareholders. The startup does not actually raise any money in a direct listing, but its employees and early investors can sell their shares right away. 

While not an option for every startup, GV's David Krane explained that a direct listing is an appealing option for startups and investors hoping to bypass the traditional IPO process with those big banks

It doesn't hurt to be able to exercise your options on the first day, either, he added.

Several investors told Business Insider that Slack's direct listing in June helped prove the strategy a reliable option for a wider range of private companies than previously thought.

Still, in a panel with Slack cofounder Cal Henderson and Spark Capital's Quinn, the pair reiterated that a direct listing is best for a startup that doesn't need an influx of cash that normally comes with a traditional IPO, and so would not work for a company like WeWork, which is facing a cash crunch.

The discussions at the Disrupt conference are the latest signs of a shifting landscape in Silicon Valley, after years of skyrocketing private market valuations that produced hundreds of "unicorns" — the glittering startups valued at $1 billion or more in the private markets. 

On Tuesday, a dozen VC firms organized a private summit with guest speakers such as the author Michael Lewis to discuss direct listings and other IPO alternatives.

For the entrepreneurs and techies who convened at the Disrupt conference, the fixation on the direct listing underscored the eternal optimism that runs through Silicon Valley. The biggest IPOs are flopping, but there's an explanation and a solution. 

And as long as VCs are still writing checks, for many startups at the event, there was no reason to panic.

SEE ALSO: Brex, the $2.6 billion credit card company for startups, explains why it's getting closer to traditional finance with its new Brex Cash bank account product

Join the conversation about this story »

NOW WATCH: Robots make burgers at this San Francisco start-up backed by Alphabet Inc.

These are the 5 largest mega-mergers so far in 2019

Sat, 10/05/2019 - 6:05am  |  Clusterstock

  • Merger and acquisition volume slowed significantly in the third quarter of 2019, while the average deal size has swelled this year, according to new data from Mergermarket. 
  • Despite the slowdown last quarter, there still have been several massive deals inked this year set to reshape industries including defense and pharmaceuticals. 
  • Here are the five largest mega-mergers so far in 2019, according to data from Mergermarket. 
  • Visit the Business Insider homepage for more stories.

Dealmakers across the world have secured $2.49 trillion worth of mergers and acquisitions during the first three quarters of 2019, according to new data from Mergermarket. 

But the seemingly massive figure is still down 11.4% from the level of deal volume seen at this time last year. M&A activity also slowed considerably more during the third quarter, falling 21.2% to $622 billion. 

The average deal size rose to $424.6 million, up from $380.1 million last year and the highest on record, based on Mergermarket data suggesting dealmakers are seeking fewer, larger transactions. 

"Whether they are motivated by the desire to get more growth, or a way to secure future survival, deals are getting larger," global editorial analytics director Beranger Guille said in the report. 

Read more: The man who wrote the book on how to make 100 times your money with a single stock outlines the core principles of his investing approach — and shares his 2 top under-the-radar picks

Guille continued: "On the back of the longest equity bull market in history, and amid persistently low interest rates, corporates have ample cash reserves and appealing debt financing options at their disposal to pursue M&A." 

Here are the 5 largest mega-deals of 2019, listed in increasing order of size, according to Mergermarket: 

5. Occidental Petroleum + Anadarko Petroleum

Tickers: OXY, APC

Sector: Energy 

Deal value: $54.4 billion

Source: Mergermarket



4. Saudi Aramco + Saudi Basic Industries Corporation

Sector: Industrials and chemicals

Deal value: $70.4 billion 

Source: Mergermarket



3. AbbVie + Allergan

Tickers: AGN, ABBV

Sector: Pharmaceuticals

Deal value: $86.3 billion

Source: Mergermarket



2. United Technologies + Raytheon

Tickers: UTX, RTN

Sector: Defense

Deal value: $88.9 billion

Source: Mergermarket



1. Bristol-Myers Squibb + Celgene

Tickers: BMY, CELG

Sector: Pharmaceuticals

Deal value: $89.5 billion

Source: Mergermarket



The week that rocked online trading: everything we know about brokers' rapid-fire moves to slash commissions

Sat, 10/05/2019 - 6:00am  |  Clusterstock

  • The business of investing and trading online is undergoing an industry-wide shift, with many big brokerages sending their commissions to zero as competition mounts.
  • Interactive Brokers, Charles Schwab, TD Ameritrade, and E-Trade all moved to eliminate fees for US-listed trades in late September and early October, in turn wiping out huge chunks of the companies' market caps. 
  • That's renewing speculation about consolidation across the industry.
  • Business Insider regularly takes our readers inside the major online brokerages. You can read our latest by subscribing to BI Prime.

Interactive Brokers. Charles Schwab. TD Ameritrade. E-Trade.

In late September and early October, many big brokerages said they would eliminate online trading commissions for US stocks and ETFs in what felt like one fell swoop. The announcements rocked the companies' shares and renewed speculation about consolidation in the industry. And many investors and analysts are trying to guess who will cut next, while at least one startup is actually looking to pay for trades. 

Several drivers are morphing these firms and influencing the choice to dump fees. Legacy brokers and big banks alike are rushing to compete with digital entrants for younger users. Meanwhile, US interest rates are falling at a faster clip than analysts had earlier expected for the rate-sensitive bunch.

Business Insider is reporting and analyzing these developments at a crucial moment for the industry. We broke down the drama unfolding in the online trading, wealth management, and discount brokerage arena.

Broker wars escalate 

October 3 —The SEC's markets guru just praised brokers for slashing commissions — but warned they still need to do what's best for investors

October 3 — Charles Schwab, E-Trade, and TD Ameritrade have seen a combined $18 billion in market value erased as the brokerage-fee war has ramped up

October 2 — E-Trade and 3 other big brokers have axed online trading commissions completely in the past week. Here's how Fidelity responded when we asked about the fees.

October 2 — Charles Schwab on Charles Schwab: The founder explains why the firm just axed commissions as broker wars reach a fever pitch

October 2 — TD Ameritrade becomes the latest broker to eliminate fees — and its free stock trades will be available before Charles Schwab's

October 1 — Charles Schwab says it will cut online stock and ETF fees to zero — and all the major brokers are getting clobbered

September 30 — The former CEO of a high-speed-trading firm is taking aim at Robinhood with a fintech startup that wants to pay you to trade

September 26 — Interactive Brokers announces commission-free trades on online US stock, ETF trades

September 24 — JPMorgan is taking aim at apps like Robinhood by quietly rolling out options trading to select You Invest customers

More brokerage and robo news

September 18 — Charles Schwab is losing a prominent markets analyst as the discount broker gears up to cut 600 jobs

September 18 — 2 senior executives are now out at Charles Schwab as the discount broker prepares to cut 600 jobs

September 13 — Wealthfront's CFO says the roboadviser is already acting like a public company. That comes as it grabs assets in a crowded, competitive market.

September 13 —Jack Dorsey's Square is reportedly testing a free stock-trading service that would rival Robinhood

August 16 — Rivals E-Trade and TD Ameritrade had CEO shakeups within weeks of each other. The departures come as competition ratchets up among e-brokers.

July 23 — Charles Schwab's retail head and marketing chief are out — and the firm's still figuring out what's next

July 22 — Robinhood, the no-fee stock trading app, just announced a giant-size $323 million round of funding, making it worth over $7 billion

July 17 — Charles Schwab is experimenting with Netflix-style pricing. It's the clearest example yet of finance trying to imitate Silicon Valley.

July 2 — The inside story of how Robinhood, a $6 billion investing app for millennials, blew a huge launch so badly that Congress got involved

April 26 — $1.2 trillion brokerage TD Ameritrade is developing a Netflix-like recommendation engine in a bid to win investor attention

March 27 — A fintech entering the crowded wealth management space just nabbed nearly $9 million in funding from the VCs that backed Venmo, Monzo and Acorns

March 18 — For the CEO of the firm backing robos like Betterment and Stash, the future of managing money could be more like ordering dinner from a restaurant

February 8 — SoFi held talks to acquire a fintech company backing some of the hottest robo advisors as it eyes expansion beyond its lending roots

Join the conversation about this story »

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'All the makings of a crash are there': A hedge fund manager sees a giant bubble in the 'Ponzi economy' — and he’s sounding the alarm on WeWork and Tesla

Sat, 10/05/2019 - 5:05am  |  Clusterstock

  • Harris Kupperman, the president of Praetorian Capital Management and author of the "Adventures In Capitalism" blog, says that his gut tells him to "sell everything."
  • "I genuinely believe there's a crash coming," he told Business Insider in an exclusive interview.
  • Kupperman also thinks the Federal Reserve's policies have created a "Ponzi economy" — and that a day of reckoning is nearing for the likes of WeWork and Tesla. 
  • Click here for more BI Prime stories.

Harris Kupperman, the president of Praetorian Capital Management and CEO of Mongolia Growth Group — a $6.1 million real estate investment firm — is currently in the midst of selling 10% to 50% of almost every position he has.

And his reasoning behind the unwind is simple: he's sees a massive market crash on the horizon.

In an exclusive interview with Business Insider, Kupperman sat down to discuss his lastest blog post, titled "Getting Ready For The Stock Market Crash..." — and he's not coy in sharing his thoughts on what he calls the "Ponzi economy."

"I genuinely believe there's a crash coming," he said. "I've been through 2 crashes in my life, and I think this is the third one."

That's stark warning — and Kupperman's thesis isn't coming out of left field. In fact, he shared a wide range of reasons for the inevitable undoing including: funding stresses, unprofitable companies selling at nosebleed valuations, structural imbalances, excess debt, and "asinine monetary policy."

"All the makings of a crash are there," he mused.

But at the heart of the matter lies what he views of the real culprit underlying it all: the Federal Reserve. He thinks their loose monetary policies have resulted in an unsustainable environment.

"When you push liquidity through the system like they have the last ten years, you create a giant bubble," he relayed.

Read more: The man who wrote the book on how to make 100 times your money with a single stock outlines the core principles of his investing approach — and shares his 2 top under-the-radar picks

And he's just getting warmed up. To Kupperman, the Fed's actions have created a "Ponzi sector."

"Ponzi stocks are things like WeWork or Tesla or other blatant frauds," he said. "The Ponzi sector being all the companies that have no chance of ever earning a profit, yet they continue to grow revenue."

Those are harsh words for investors who own a piece of these companies. But don't be so quick to dismiss his perspectives. Neither of these firms are anywhere close to turning a profit, and the former has experienced a CEO change, a failed IPO, and roughly a $40 billion cut to its valuation in the last six weeks.

"These things literally have no economic rationale to exist expect for the fact that liquidity has been pushed through the system, and people keep buying shares because they believe that there's some other sucker who's even dumber than they are," Kupperman said.

Against that gloomy backdrop, Kupperman says he's looking for sectors that are widely hated and undervalued. He's built his success by going against the grain and waiting for an inflection point. 

Some of his favorite plays today are: shipping, energy, uranium, and the Greek economy — places a conventional investor wouldn't dream of touching in today's market environment.

If you agree with his thinking, an investor looking for broad exposure to these ideas could purchase:

Now read: A self-taught hedge fund manager who's returned 19%-plus annually to investors since 2012 shares the 3 books that 'put it all together' for him

SEE ALSO: The man who wrote the book on how to make 100 times your money with a single stock outlines the core principles of his investing approach — and shares his 2 top under-the-radar picks

Join the conversation about this story »

NOW WATCH: Amazon is reportedly seeking a new space in New York City. Here's why the giant canceled its HQ2 plans 5 months ago.

These bold Nigerian companies are targeting non-consumption, and winning By: Efosa Ojomo @EfosaOjomo

Fri, 10/04/2019 - 8:26pm  |  Timbuktu Chronicles
Efosa Ojomo writes:
...If I lived in Nigeria today, having uninterrupted access to electricity would be a fantasy. Ordering products online and using ride-hailing services would be possible, but only if I were wealthy since services like these are still niche and expensive. But all of that is changing.

New ventures are springing up across the country, eager to make a dent in poverty by targeting nonconsumption. Our research has shown that bold entrepreneurship focused on market-creating innovations—innovations that target nonconsumption by making products and services simple and affordable so that many more people can afford them—can truly transform Nigeria.More here

12 of the best credit card offers in October, from 75,000 Delta miles to the best rewards card for beginners

Fri, 10/04/2019 - 4:02pm  |  Clusterstock

  • Signing up for a rewards credit card and earning its welcome bonus is one of the easiest ways to earn a ton of points, miles, or cash back.
  • While some credit card bonuses stay largely the same, others increase from time to time. Pay extra attention to these limited-time offers.
  • In October, you can score up to 75,000 miles with Delta's co-branded credit cards. And the Chase Sapphire Preferred Card's offer remains a great way to get started with some of the most valuable points around.
  • Read more personal finance coverage.

If you want to earn points and miles, there's no quicker route than signing up for a rewards credit card and earning its sign-up bonus. This typically requires meeting a minimum spending requirement in the first three months or 90 days, and it's well worth it — you'll be rewarded with thousands of points or miles to put toward your next trip, or with a sizeable amount of cash back.

Before you apply for any new cards, make sure you understand how credit card applications affect your credit score. Then, scroll down to check out some of the best sign-up offers available in October.

Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which can far outweigh the value of any rewards.

When you're working to earn credit card rewards, it's important to practice financial discipline, like paying your balances off in full each month, making payments on time, and not spending more than you can afford to pay back. Basically, treat your credit card like a debit card.

1. Chase Sapphire Preferred

Welcome offer: 60,000 Chase points after you spend $4,000 in the first three months

Annual fee: $95

If you want a rewards credit card with points that can be used with a variety of travel partners, you can't go wrong with the Sapphire Preferred. It's one of the best general credit card picks if you're new to the world of points and miles or if you don't want to pay the $450 annual fee of the Chase Sapphire Reserve, as the Sapphire Preferred has a $95 annual fee.

The card has been offering a 60,000-point sign-up bonus for the last several months, and you can use those points to book travel directly through Chase, or you can transfer them to partners like British Airways, Hyatt, Singapore Airlines, and United.

Beyond earning some of the most valuable points around, the Sapphire Preferred offers primary car rental insurance and doesn't charge foreign transaction fees.

Click here to learn more about the Sapphire Preferred. 2. The Platinum Card® from American Express

Welcome offer: 60,000 Amex points after you spend $5,000 in the first three months

Annual fee: $550

If you travel frequently and can put its many, many benefits to use, the Amex Platinum can be an easy decision even with its $550 annual fee. See how Business Insider's David Slotnick got more than $2,000 in value from the card in his first year for more info.

Some of the card's top perks include a 5x earning rate on airfare purchased directly from the airline, up to $200 in airline fee credits each calendar year, up to $200 in Uber credits each cardmember year, and up to $100 in Saks Fifth Avenue credits each calendar year. 

The card also stands out for its airport lounge access benefits. As a card member, you can access Amex Centurion Lounges, Delta Sky Clubs (when you're flying Delta), Priority Pass lounges, Air Space Lounges, International American Express Lounges, Escape Lounges, and Plaza Premium Lounges.

You can use the Amex Membership Rewards points you'll earn with this card to book travel with airlines like British Airways, Delta, and Emirates, and with hotel partners including Marriott.

Click here to learn more about the American Express Platinum. 3. Gold Delta SkyMiles® Credit Card from American Express

Welcome offer: 60,000 SkyMiles after you spend $2,000 in the first three months. Plus, earn a $50 statement credit when you make a Delta purchase in the first three months. This offer is only available until October 30.

Annual fee: $95; waived the first year

Delta and Amex announced many positive updates to its lineup of co-branded airline credit cards. While the changes won't take effect until January 30, 2020, three Delta consumer credit cards are offering elevated welcome bonuses now through October 30.

Next year, the Gold Delta Amex will add 2x miles at US supermarkets and at restaurants and a $100 Delta flight credit when you spend $10,000 on the card in a year. The card will no longer offer an Medallion Qualification Dollar waiver benefit for elite status, and the reduced Delta Sky Club admission perk will be discontinued. The annual fee will be increasing slightly, to $99. 

Click here to learn more about the Gold Delta Amex. 4. Marriott Bonvoy Business™ American Express® Card

Welcome offer: 100,000 Marriott points after you make $5,000 in qualifying purchases in the first three months. Plus, get a 0% APR on purchases for the first six months, then a variable rate of 17.49% to 26.49%.

Annual fee: $125

This is a good month for business credit card welcome bonuses, as several of them are currently elevated. One example is the Marriott Bonvoy Business Amex, which is offering 25,000 more points than its standard welcome bonus now through October 23.

Beyond the welcome bonus, this card offers an annual free night award for hotels that cost up to 35,000 points, and cardholders get complimentary Marriott Silver status. This could be a good choice for your business if you travel frequently and could make good use of Marriott points for an upcoming vacation.

Click here to learn more about the Marriott Bonvoy Business Amex. 5. Platinum Delta SkyMiles® Credit Card from American Express

Welcome offer: 75,000 SkyMiles and 5,000 MQMs after you spend $3,000 in the first three months. Plus, earn a $100 statement credit when you make a Delta purchase in the first three months. This offer is only available until October 30.

Annual fee: $195 ($250 if application is received on or after January 30, 2020)

Like the Gold Delta Amex, the Platinum Delta card is offering an elevated welcome bonus in October to celebrate the upcoming changes to the Delta line of Amex cards

If you apply for the Platinum Delta Amex on or after January 30, 2020, you'll pay a higher annual fee of $250. However, at that time, the card will also be adding 3x miles (up from 2x) on Delta purchases, plus 2x miles at restaurants and US supermarkets. Additionally, the card will gain a statement credit of up to $100 to cover the application fee for Global Entry or TSA PreCheck.

Click here to learn more about the Platinum Delta Amex. 6. The Business Platinum® Card from American Express

Welcome offer: 50,000 Amex points after you spend $10,000 and another 50,000 points after you spend an additional $15,000 all on qualifying purchases in the first three months

Annual fee: $595

Until December 4, the Business Platinum Amex is offering an elevated welcome bonus of up to 100,000 points. You'll have to spend a total of $25,000 in the first three months to earn the full bonus, but if your business can easily meet that spending requirement, it could be well worth it.

Based on The Points Guy's valuations, 100,000 Amex points are worth $2,000. The card's standard welcome bonus is for 75,000 points, so now's a great time to apply if you were already considering the Business Platinum.

Card benefits include up to $200 in airline incidental fee credits each year, up to $200 in annual Dell statement credits, complimentary Gold status with Hilton and Marriott, and airport lounge access. If you enroll by December 31, you can also get a year of Platinum Global WeWork access, which means you can use coworking spaces around the world. 

Click here to learn more about the Business Platinum Card. 7. Capital One® Venture® Rewards Credit Card

Welcome offer: 50,000 miles after you spend $3,000 in the first three months

Annual fee: $95 (waived the first year)

The Venture Rewards card has consistently added benefits over the last year or so. While previously you could only use miles to erase purchases on your statement, you can now transfer them to a variety of airline programs, including Air Canada, Air France/KLM and Etihad. There are occasionally transfer bonuses that help you stretch your miles further, too.

This card offers a strong lineup of benefits considering the reasonable $95 annual fee (that's waived the first year). You get an application fee credit of up to $100 for Global Entry or TSA PreCheck, and earn 10x miles when you book hotels through the hotels.com/venture landing page.

Earning 10 miles per dollar on hotels is hard to beat, and that's in addition to the free night for every 10 paid nights you book that you'll earn through the Hotels.com Rewards program. You'll also earn 2x miles on all non-hotel purchases.

Click here to learn more about the Capital One Venture. 8. Wells Fargo Propel American Express® card

Welcome offer: 30,000 bonus points after you spend $3,000 in the first three months

Annual fee: $0

If you prefer earning cash back to points and miles, the Wells Fargo Propel is a great choice. It earns 3 points per dollar on dining, on travel, gas stations, rideshares, and on popular streaming services, and 1 point per dollar on everything else. That's a strong selection of bonus categories, and it's even better when you consider that this card has no annual fee. 

The Propel Card also includes cell phone protection, and there are no foreign transaction fees.

Click here to learn more about the Wells Fargo Propel Amex. 9. American Express® Gold Card

Welcome offer: 35,000 Amex points after you spend $2,000 in the first three months

Annual fee: $250

If you eat out or buy groceries on a regular basis, the Amex Gold card is made for you. You'll earn 4 points per dollar at restaurants, and 4 points per dollar on the first $25,000 spent at US supermarkets each year (then 1 point per dollar). The card also offers up to $120 in dining credits each year, split into $10 each month, at Grubhub, Seamless, The Cheesecake Factory, Ruth's Steak House, or participating Shake Shack locations.

As with the Amex Platinum, you can use the Amex Membership Rewards points earned from this card to book travel with more than 15 airline partners and three hotel programs (Choice, Hilton, and Marriott).

Click here to learn more about the Amex Gold Card. 10. IHG Rewards Club Premier Credit Card

Welcome offer: 125,000 points after you spend $3,000 in the first three months

Annual fee: $89

This is a solid hotel co-branded credit card thanks to its annual free night benefit – each year after your account anniversary, you'll get a free night certificate that you can use at IHG hotels that cost up to 40,000 points per night. The card also offers complimentary Platinum Elite IHG status and a statement credit of up to $100 to cover the cost of Global Entry or TSA PreCheck.

The IHG Premier Card just launched a new sign-up offer that gets you 45,000 more points than the previous 80,000-point bonus. So if you can fit any IHG points stays into your upcoming travel plans, that higher bonus — combined with the annual free night — make this a strong option.

Click here to learn more about the IHG Rewards Club Premier Credit Card. 11. Ink Business Preferred Credit Card

Welcome offer: 80,000 points after you spend $5,000 in the first three months

Annual fee: $95

The Ink Business Preferred card offers the highest sign-up bonus among Chase cards that earn Ultimate Rewards points. Plus, it has generous bonus categories — you'll earn 3 points per dollar in the first $150,000 in combined purchases you make on categories including travel, shipping, and advertising (and 1 point per dollar on everything else).

This card has a $95 annual fee, and it offers benefits like primary rental car insurance when you're renting a car for business purposes.

Click here to learn more about the Ink Business Preferred. 12. 75k points with the Brex corporate card

Welcome offer: 75,000 points upon sign-up with the Brex Corporate Card for Startups and the Brex Corporate Card for Ecommerce

Annual fee: None

The two versions of the Brex corporate card could be worth a look if you have a small business and are willing to make this your exclusive corporate card. When you do, you can earn up to 7x points on purchases, and you can redeem points with seven airlines, including JetBlue and Singapore Airlines. The Brex Corporate Card for Startups and the Brex Corporate Card for Ecommerce are offering elevated bonuses of 75,000 points to those who sign up by October 31.

Read more: Brex corporate credit card review

More credit card coverage

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NOW WATCH: Nxivm leader Keith Raniere has been convicted. Here's what happened inside his sex-slave ring that recruited actresses and two billionaire heiresses.

The cofounders of Juul have both lost their billionaire status after less than 10 months in the 3-comma club

Fri, 10/04/2019 - 3:54pm  |  Clusterstock

Juul cofounders Adam Bowen and James Monsees are no longer billionaires, according to Forbes estimates. 

The majority of the pair's respective net worths are tied to their 1.75% stakes in the e-cigarette maker, Forbes' Sergei Klebnikov reported. One of the company's biggest investors, hedge fund Darsana Capital Partners, reportedly cut the company's valuation by more than a third on October 3, slicing Bowen and Monsees' net worths, too. The pair first became billionaires in December 2018.

Juul did not immediately respond to Business Insider's request for comment on Bowen and Monsees' net worths or their status as billionaires.

Read more: The precarious path of e-cig startup Juul: From Silicon Valley darling to $38 billion behemoth under criminal investigation

Juul is now worth $24 billion, down from the $38 billion valuation the company hit after an investment from tobacco maker Altria in December 2018, Markets Insider previously reported. Altria's $13 billion investment made Bowen and Monsees billionaires for nearly ten months, according to Forbes estimates. 

The pair founded Juul after meeting on smoke breaks while studying product design at Stanford University in 2004, Business Insider previously reported. Ploom, a precursor to Juul, was launched in 2007 and first released Juul products in 2015. The company's Juul line was spun into a separate firm in 2017.

Juul has faced widespread public concern over its youth-focused marketing and the long-term health impacts of its products amid a rising number of vaping-related illnesses and deaths. The Trump administration is currently exploring a ban on flavored vaping products, The Wall Street Journal reported. Such products are responsible for nearly 80% of Juul's sales in the US, according to The Journal. The e-cigarette maker is also reportedly under criminal investigation by the US Attorney's Office for the Northern District of California.

Juul CEO Kevin Burnes resigned on September 25. Juul also said it would suspend US advertising and some lobbying efforts. Additionally, the company is preparing to scale back its staff, The Wall Street Journal reported on September 24.

SEE ALSO: Forever 21 just filed for bankruptcy — and the husband and wife duo who founded it have lost nearly $4 billion from their personal net worths since 2015

DON'T MISS: Mysterious vaping illnesses are causing life-threatening lung injuries and death. Here’s what we know about the people who have been affected so far.

Join the conversation about this story »

NOW WATCH: Most hurricanes that hit the US and Caribbean islands come from the same exact spot in the world

Here are the 12 banks who advised on the most M&A activity in the 3rd quarter

Fri, 10/04/2019 - 3:40pm  |  Clusterstock

  • There have been several mergers and acquisitions in 2019 that are set to reshape the dynamic of industries such as defense, pharmaceuticals, and energy. 
  • Mergermarket — an editorial and analytics firm that tracks M&A activity — published its third quarter report highlighting the biggest deals and the banks behind them.
  • Here are the 12 banks who advised the most M&A activity in the third quarter of 2019. 
  • Visit the Business Insider homepage for more stories.

Massive mergers and acquisitions in 2019 are set to change the landscape of industries such as defense, pharmaceuticals, and energy. 

Editorial and analytics firm Mergermarket published its quarterly M&A report detailing overall deal flow for the year, the biggest transactions, and the banks behind them. 

According to the firm's report, global M&A volume is down 11.4% year-over-year to $2.49 trillion over the first three quarters of 2019. However, while the overall volume is down, the average deal size has swelled to a record $424.6 million. The dynamic suggests dealmakers are looking for fewer, larger deals. 

"Whether they are motivated by the desire to get more growth, or a way to secure future survival, deals are getting larger," global editorial analytics director Beranger Guille said in the report. 

Guille continued: "On the back of the longest equity bull market in history, and amid persistently low interest rates, corporates have ample cash reserves and appealing debt financing options at their disposal to pursue M&A." 

Here are the 12 banks who advised the most M&A activity in the third quarter of 2019, ranked in increasing order of total deal volume: 

12. Jefferies

Total deals in Q3: 131

Total value of deals: $162 million

Source: Mergermarket



11. Lazard

Ticker: LAZ

Total deals in Q3: 166

Total value of deals: $167 million

Source: Mergermarket



10. PJT Partners

Ticker: PJT

Total deals in Q3: 30

Total value of deals: $171 million

Source: Mergermarket



9. RBC Capital Markets

Ticker: RY

Total deals in Q3: 80

Total value of deals: $188 million

Source: Mergermarket



8. Barclays

Ticker: BCS

Total deals in Q3: 137

Total value of deals: $251 million

Source: Mergermarket



7. Credit Suisse

Ticker: CS

Total deals in Q3: 116

Total value of deals: $288 million

Source: Mergermarket



6. Bank of America

Ticker: BAC

Total deals in Q3: 149

Total value of deals: $512 million

Source: Mergermarket



5. Evercore

Ticker: EVR

Total deals in Q3: 120

Total value of deals: $559 million

Source: Mergermarket

 

 



4. Citigroup

Ticker: C

Total deals in Q3: 154

Total value of deals: $581 million

Source: Mergermarket

 

 

 



3. Morgan Stanley

Ticker: MS

Total deals in Q3: 188

Total value of deals: $764 million

Source: Mergermarket

 

 

 



2. JPMorgan

Ticker: JPM

Total deals in Q3: 210

Total value of deals: $790 million

Source: Mergermarket

 

 

 



1. Goldman Sachs

Ticker: GS

Total deals in Q3: 259

Total value of deals: $981 million

Source: Mergermarket

 

 

 



The Fed says it will continue overnight repos of at least $75 billion through November 4

Fri, 10/04/2019 - 3:31pm  |  Clusterstock

  • The Federal Reserve announced Friday that it will extend overnight repos of at least $75 billion through November 4. 
  • The bank's previous plans to calm rates in money markets only extended through Oct. 10. 
  • Since short-term rates shot up as high as 10% in September, the Fed has injected hundreds of billions of dollars into money markets. 
  • Read more on Business Insider.

The Federal Reserve will continue its practice of injecting money into financial markets through November 4 to help keep the federal funds rate within the bank's target. 

The New York Fed said Friday that it will continue to offer daily overnight repurchase agreement operations between October 7 and November 4 with a maximum limit of at least $75 billion. The previous plan to conduct the repos only extended through October 10. 

The Friday announcement also included eight term operations that will take place between October 8 and October 29. The first three have limits of at least $45 billion, and the rest have limits of at least $35 billion.  After November, it has yet to be determined if the Fed will continue the practice

"The operation schedules are subject to change if market conditions warrant or should the FOMC alter its guidance to the Desk," the Fed wrote in a statement. 

The announcement comes after a number of efforts to stabilize money markets and contain interest rates that began in September. Since then, the Fed has pumped hundreds of billions of dollars into markets to bring interest rates back within the central bank's intended range.

In early September, short-term rates shot up as high as 10%. That's four times as much as usual levels, a move that could disrupt the bond market and lending system if left unchecked. 

There's even been discussions that the Fed is considering a permanent solution to calm the storm in money markets. In an interview with the New York Times last month, New York Fed President John Williams said the bank could consider establishing an ongoing facility for repos.

Read more: A self-taught hedge fund manager who's returned 19%-plus annually to investors since 2012 shares the 3 books that 'put it all together' for him

Join the conversation about this story »

NOW WATCH: 7 lesser-known benefits of Amazon Prime

CULTIVATED: Square is getting into CBD, the FDA levels a stark warning against THC vapes, and more

Fri, 10/04/2019 - 3:18pm  |  Clusterstock

Welcome to Cultivated, our weekly newsletter where we're bringing you an inside look at the deals, trends, and personalities driving the multibillion-dollar global cannabis boom. Sign up here to get it in your inbox every Friday.

Happy Friday, 

Welcome to another edition of Cultivated. I spent much of the week chatting with folks from all over the cannabis industry at the Arcview Investor Forum, which has handily located seven floors below Business Insider's headquarters.

I interviewed Trulieve CEO Kim Rivers on the main stage on Wednesday where our discussion touched on what it's like to be one of the few female CEOs of a publicly-traded cannabis company, how she's working to "inject diversity" into her board and throughout the company, as well as some more nuts-and-bolts stuff about the business.

Check out my top cannabis stories from this week below, including an exclusive report on dangerous chemicals in illicit vapes, Square jumping into the CBD industry, and a rundown of the key lessons startup CEOs learned while raising venture capital in the crazy cannabis industry.

-Jeremy 

Here's what we wrote about this week:

A California cannabis lab tested counterfeit vapes and found high levels of dangerous chemicals including vitamin E, pesticides, and hydrogen cyanide

In a new report shared exclusively with Business Insider, California cannabis-testing lab CannaSafe found that out of 12 illicit vape cartridges tested, nine contained dangerously high levels of Vitamin E acetate. All of them contained pesticides.

Out of 104 legal vapes tested, none contained vitamin E acetate or banned pesticides, and all matched their THC label claims. 

Cannabis startup founders share 4 critical lessons they learned while raising money in the unique industry

Cannabis startups — both cannabis-tech and 'plant-touching' — have to get creative to raise money since THC is federally illegal in the US. Most large venture funds still won't touch the industry, so there's a dearth of growth-stage capital, founders say.

Cannabis startup founders shared four key lessons for raising money in the unique industry with Business Insider. 

Square's top lawyer explains what's behind the company's push into the trendy CBD space

Square is rolling out its full payment-processing platform to all CBD sellers in the US.

The company is opening up its platform to CBD sellers after it conducted a three-month "invite-only" beta program, which started in May, for a small group of CBD startups. 

Square is solving one of the biggest issues for CBD merchants, which often have to use high-risk payroll processors and pay exorbitantly high fees.

Capital raises, M&A activity, partnerships, and launches
  • PathogenDx, a DNA-based testing technology for the cannabis and hemp industries, closed a $7.5 million Series B round led by Entourage Effect Capital, Altitude Investment Management, and more.
  • Cresco Capital Partners announced its name change to Entourage Effect Capital. The firm is launching a new fund with an initial target of $150 million, managing partner Matt Hawkins told me on the sidelines of the Arcview conference. 
  • Canopy Growth purchased a 72% stake in Biosteel Sports, with a path to complete ownership. As part of the deal, Canopy and Biosteel will produce a CBD-infused beverage as soon as regulations permit.
  • Cannabis website Leafly has launched a super-cool new tool: The Leafly Cannabis Guide. Built by Harvard Neuroscience Ph.D. and Leafly data scientist Nick Jikomes, the tool breaks down the active compounds in cannabis — including the terpenes and cannabinoids — and puts it into a handy visualization tool so you can see exactly what's in your strain. 
  • Vape company Dosist is launching a dose-controlled sublingual THC tablet. CEO Gunner Winston told me he saw a need in the market for micro-dosable, non-vape consumption methods. 
Executive moves
  • Ellen Deutsch, a former Haines executive, is joining Stem Holdings as COO.
  • Ex-NBA player Jamal Mashburn is joining Revolution Enterprises as an advisor to the board.
  • Former Aphria president Jakob Ripshtein is joining the Israel-based Seedo's advisory board.
  • Nina Simosko, previously the CEO of NTT Innovation Institute Inc is joining the NASDAQ-listed Akerna Corp as Chief Revenue Officer.
Stories from around the web

Did I miss anything? Have a tip? Just want to chat? Send me a note at jberke@businessinsider.com or find me on twitter @jfberke.  

Join the conversation about this story »

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Facebook’s cryptocurrency push takes a big hit as PayPal cuts ties with Libra (FB, PYPL)

Fri, 10/04/2019 - 3:16pm  |  Clusterstock

PayPal announced on Friday that it will no longer be part of Facebook's Libra cryptocurrency project, Bloomberg's Sarah Frier first reported.

PayPal told Bloomberg that it remains "supportive of Libra's aspirations."

PayPal was set to be one of the members of the Libra Association, a group of more than two dozen companies that originally planned to co-found Libra with a goal of rolling out the cryptocurrency by June 2020.

A Libra spokesperson confirmed that PayPal will not be joining the cryptocurrency in a statement to Business Insider.

Facebook first announced its plans to create Libra in July. In the months that followed, the proposed cryptocurrency has drawn scrutiny and concern from elected officials and Facebook users still reeling from a series of privacy scandals at the social network. Some lawmakers have even gone so far as to say that Facebook should halt its work on the project entirely.

Libra boss David Marcus spent hours in July being grilled by lawmakers on Capital Hill. The Facebook executive was previously president of PayPal.

Nervous about this heightened scrutiny, many of Libra's backers have avoided making public statements in favor of the cryptocurrency. Visa and Mastercard are among the members of the group who have backed away from publicly supporting Libra, according to The Wall Street Journal.

Apple CEO Tim Cook appeared to slam the cryptocurrency on Thursday, stating that companies like Facebook "shouldn't be looking to gain power this way."

A spokesperson for PayPal was not immediately available for comment.

In a statement to Business Insider, the Libra Association's head of policy and communications Dante Disparte said 1,500 entities have indicated that they're willing to participate in Libra.

"Building a modern, low-friction, high-security payment network that can empower billions of financially underserved people is a journey, not a destination. This journey to build a generational payment network like the Libra project is not an easy path. We recognize that change is hard, and that each organization that started this journey will have to make its own assessment of risks and rewards of being committed to seeing through the change that Libra promises. We look forward to the first Libra Council meeting in 10 days and will be sharing updates following that, including details of the 1,500 entities that have indicated enthusiastic interest to participate," Disparte said.

Join the conversation about this story »

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Could treatments for Alzheimer's disease and concussions be hanging out unused in your medicine cabinet? This think tank thinks so — and wants to put them to work.

Fri, 10/04/2019 - 3:13pm  |  Clusterstock

  • A new project from the think tank Helena aims to find new treatments for conditions like Alzheimer's disease and concussions by taking another look at drugs that already exist.
  • This approach, called "generic drug repurposing," can be faster and cheaper than other ways of developing drugs, but isn't financially incentivized today.
  • Helena and its partners want to change that by setting up a new kind of financial mechanism.
  • Visit Business Insider's homepage for more.

Several years ago, the neuroscientist and entrepreneur Rebecca Brachman made an accidental discovery that she thought could be a game-changer for psychiatry.

Her research, done in mice, suggested that a cheap generic drug could be used preventively to stave off conditions like post-traumatic stress disorder and depression, Brachman said. 

But Brachman would soon find it was a no-go. Investors were only interested in new compounds, where patent protection makes it financially lucrative to invest in research and development.

Brachman is now partnering with the think tank Helena and prominent figures like former US Food and Drug Administration Commissioner Mark McClellan and investor Dave Morin in hopes of changing that. 

"If you were to look at the entirety of the potential of diseases we could address, beyond just one set of drugs, the potential savings are enormous," Lyn Stoler, project director at Helena, told Business Insider. "And that's not even looking at the human health impact." 

A new financial mechanism aimed at solving a well-known problem

Drugs can be used to treat more than one disease, and generic drugs — already available at typically low prices to consumers — would appear to be obvious candidates for just that. That process, called "generic drug repurposing," can be faster and cheaper for a developer. Yet without intellectual property protection to justify the investment, there's a lack of financial incentive to do so — a problem that's well-known in the academic community, but not as much outside it.

So Helena and its partners are proposing a solution: a financial mechanism in which investors benefit from the savings that these types of drugs bring to the healthcare system, similar to a model like social impact bonds. 

The idea is that groups like academic research organizations or the government would carry out the project, with the support of private investors like venture capital firms. If the new drugs are successful, backers that stand to benefit — like the federal government, state governments, employers, or private insurers — would pay back some share of the savings.  

Helena says that generic drug repurposing can take just three to five years, compared with the decade plus that traditional drug development takes.

'Repurposed' drugs could be used for Alzheimer's disease, concussion and multiple sclerosis

Based on preliminary economic modeling, repurposed generics could save tens of billions of dollars in the US alone, Helena's Stoler said.

"These are massive, massive healthcare savings," she said. 

Helena is now showcasing the plan to attract backers and investors. The team has been in touch with the nonprofit the Pacific Business Group on Health, which represents large employers like Walmart and Boeing, as well as research teams involved in work on repurposing candidates.

That list of drugs includes:

  • the antiviral valacyclovir, which could have applications in Alzheimer's disease
  • the antidepressant phenelzine, which could be used in concussion, chronic traumatic encephalopathy, traumatic brain injury and stroke
  • silver diamine fluoride, for dental cavities
  • the antihistamine clemastine fumarate, for multiple sclerosis

Join the conversation about this story »

NOW WATCH: Look inside the 3D-printed Mars home that NASA awarded $500,000

Phil Knight, the billionaire cofounder of Nike, just listed his golf course retreat for $1.55 million, months after selling a neighboring parcel of land for $2 million. Here's a look inside.

Fri, 10/04/2019 - 2:29pm  |  Clusterstock

Nike cofounder Phil Knight was just ranked No. 16 on Forbes 400 list. With a current estimated net worth of $35.9 billion, real estate is just a drop in the bucket for him.

Earlier this year, The Real Deal reported that he'd unloaded a plot of land in La Quinta's exclusive Madison Club. According to the Los Angeles Times, the property was flanked by fairways and purchased by the now-billionaire for $2.5 million a decade ago. In March, Knight sold the parcel for $2 million.

Read more: Nike founder Phil Knight only hired accountants and lawyers to lead the company in its early days — here's why

Now, he's selling his nearby three-bedroom, three-bathroom home on the grounds of La Quinta Resort and Club community for $1.55 million. 

According to the property's listing, it boasts an open floorplan, plenty of natural light, and breathtaking mountain views in addition to golf course views. The 4,437-square-foot home sits on the 12th fairway of La Quinta Resort and Club's Mountain Course.

Keep reading for a look inside the home. Kay Bastasini of Desert Vintage Realty holds the listing.

SEE ALSO: Alex Rodriguez just sold his Hollywood Hills mansion at a loss — take a look inside the $4.4 million 'experimental' home he bought from Meryl Streep

DON'T MISS: Boxing legend Sugar Ray Leonard is selling his California estate for nearly $52 million. Here's a look inside the property, complete with a sprawling mansion, a 2-story guest house, and its own putting green.

Phil Knight, the founder and premier shareholder of Nike, has an estimated net worth of $35.9 billion.

Source: Forbes



He just listed a 4,437-square-foot home in La Quinta, California, for $1.55 million.

Source: Los Angeles Times



The home is located on the 12th fairway of La Quinta Resort and Club's Mountain Course. It offers uninterrupted views of the area's leading golf destination.

Source: Desert Vintage Realty via Zillow



The home is separated from the fairway by light landscaping.

Source: Desert Vintage Realty via Zillow



The patio has both a pool and a spa.

Source: Desert Vintage Realty via Zillow



The home is equipped with floor-to-ceiling windows and sliding doors to ensure maximum natural light.

Source: Desert Vintage Realty via Zillow



The open floor plan connects the foyer, the living room, the dining room, and the kitchen.

Source: Desert Vintage Realty via Zillow



The kitchen has a breakfast bar, a center island, and granite counter tops throughout.

Source: Desert Vintage Realty via Zillow



The master bedroom has an octagonal shape with a vaulted ceiling, making the already spacious suite feel even larger. There are two other bedrooms.

Source: Desert Vintage Realty via Zillow



The private ensuite bathroom has an enormous shower and a spa-like soaking tub. There are two other bathrooms.

Source: Desert Vintage Realty via Zillow



Walmart is selling off retro online brand ModCloth just over 2 years after acquiring it (WMT)

Fri, 10/04/2019 - 2:18pm  |  Clusterstock

  • Walmart is selling ModCloth, its digitally native women's apparel brand.
  • Brand investment company Go Global Retail will acquire ModCloth, according to a press release posted Friday.
  • Walmart executive Ashley Hubka said in a statement that the retail giant still felt ModCloth possessed "strong brand equity."
  • Visit Business Insider's homepage for more stories.

Walmart is selling off ModCloth, the online women's apparel brand that it acquired in March 2017. 

According to a press release posted Friday, brand investment company Go Global Retail will buy the clothing company for an undisclosed sum. In the statement, Walmart senior vice president of corporate strategy, development and partnerships Ashley Hubka said that ModCloth had "strong brand equity."

"We feel good about the progress at ModCloth and believe that Go Global's team and scale out strategy presents an attractive opportunity for the employees and customers of this beloved brand," Hubka said.

The retail giant is spinning off its vintage-themed acquisition a little over two years after first acquiring it for an undisclosed sum, through Walmart's subsidiary Jet.com. According to the release, the ModCloth deal will officially close sometime in 2019. 

"We believe that together with current management, ModCloth has the ability to become a stronger player in the premium fashion market, nationally as well as internationally," Go Global managing director Jeff Streader said in the statement.

SEE ALSO: Walmart is working on a mysterious 'flower-pot' device that can monitor your health from afar — here's the full story

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Jerome Powell held calls with the CEOs of JPMorgan and Citigroup the day after the Fed cut rates for the first time since 2008

Fri, 10/04/2019 - 2:17pm  |  Clusterstock

  • Federal Reserve Chairman Jerome Powell held phone calls with top Wall Street executives at the start of August.
  • That came a day after the central bank cut interest rates for the first time since the global financial crisis. 
  • Powell spoke with JPMorgan's Jamie Dimon for seven minutes and Citigroup's Michael Corbat for 15 minutes on the morning of August 1, according to his public schedule
  • Visit Business Insider's homepage for more stories.

Federal Reserve Chairman Jerome Powell held phone calls with top Wall Street executives at the start of August, a day after the central bank cut interest rates for the first time since the global financial crisis. 

Powell spoke with JPMorgan's Jamie Dimon for seven minutes and Citigroup's Michael Corbat for 15 minutes on the morning of August 1, according to his public schedule

Later that afternoon, financial markets dropped sharply after President Donald Trump abruptly announced he would move forward with tariffs on an additional $300 billion worth of Chinese products. The Fed had a day earlier lowered its benchmark rate by a quarter percentage point but signaled it was not necessarily the start of an easing cycle. 

Powell also met with Bank of America's Brian Moynihan for a half hour on August 14, the schedule said. Bank of America and Citigroup did not immediately respond to an email requesting comment. JP Morgan said it does not comment on meetings or calls with government officials. 

Dimon, Corbat, and Moynihan separately spoke with Trump after a key recession signal flashed in mid-August for the first time since before the financial crisis .

Now read: Ray Dalio warns the White House's latest plan to clamp down on Chinese investment could soon become a reality. Here's why he thinks 'all market participants need to worry.'

SEE ALSO: We just got the latest sign the US is losing manufacturing jobs — the opposite of what Trump's trade wars were supposed to accomplish

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3 lawyers defending Theranos founder Elizabeth Holmes say they haven't been paid in over a year and would like to quit

Fri, 10/04/2019 - 1:46pm  |  Clusterstock

  • Elizabeth Holmes, the founder of the disgraced blood-testing startup Theranos, has been in and out of court since the company's inaccuracies and shortcomings were exposed in 2015.
  • Last week, the attorneys defending Holmes against a class-action suit filed a motion to withdraw from representing her, saying they haven't been paid in over a year.
  • The lawyers said that given Holmes' "current financial situation" they don't expect to ever get paid for their services and that it would be "unfair and unreasonable" for them to continue representing her.
  • Visit Business Insider's homepage for more stories.

Three attorneys defending Elizabeth Holmes in federal court are trying to quit the case because they say the Theranos founder, once valued at $4.5 billion, hasn't paid them in over a year.

The lawyers, who work at the law firm Cooley, have been representing Holmes against a federal class-action lawsuit brought on by former Theranos patients who allege their blood tests from the startup yielded inaccurate results and caused them to undertake unnecessary medical costs.

However, the attorneys filed a motion last week to withdraw as counsel for Holmes, saying Holmes hasn't paid Cooley for its defense work "for more than a year." The law firm said that it doesn't expect Holmes to ever pay it for services, given her "current financial situation," and that it would be "unfair and unreasonable" for it to continue representing her, the documents said.

The Mercury News first reported on the lawyers' motion to withdraw as counsel.

Read more: Theranos founder Elizabeth Holmes faces jail time for fraud charges. Her trial is set to begin in summer 2020.

The class-action suit was filed in 2016 in Phoenix, where Theranos operated several blood-testing "wellness centers" out of Walgreens stores in the area. Holmes, Walgreens, and Theranos, who are also named as defendants, have all denied wrongdoing in the case. No trial date has been set.

The civil lawsuit in question is separate from the one involving criminal charges against Holmes that could result in jail time. In that case, the Department of Justice has charged Holmes and Theranos' former president, Sunny Balwani, with multiple counts of fraud. The charges stem from allegations that Holmes and Balwani, who hid that they were romantically involved for much of the time they headed Theranos, schemed to defraud the startup's investors, its doctors, and its patients while knowing that its test results were inaccurate and unreliable.

The trial in the criminal case is set to begin in July 2020. Both Holmes and Balwani could face up to 20 years in prison, as well as a $250,000 fine plus restitution for each charge, the government has said.

The lawyers defending Holmes in the criminal case did not respond to Business Insider's questions about whether they had been paid for their representation.

SEE ALSO: The rise and fall of Elizabeth Holmes, who started Theranos when she was 19 and became the world's youngest female billionaire but will now face a trial over 'massive fraud' in July 2020

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'Moving fast and breaking things in peoples' mouths': A research firm said SmileDirectClub has 85% downside just weeks after it notched the worst US IPO in 12 years (SDC)

Fri, 10/04/2019 - 1:38pm  |  Clusterstock

  • Hindenburg Research on Friday released a report on SmileDirectClub detailing the company's issues and reasons the firm decided to short the stock.
  • The report details financial, regulatory, and competitive reasons why Hindenburg sees SmileDirectClub stock falling 85% below current levels.
  • In September, SmileDirectClub's posted the worst first-day performance since 2007 for a US initial public offering over $1 billion, according to Bloomberg data.
  • Watch SmileDirectClub trade live on Markets Insider.

SmileDirectClub might not be smiling much longer. 

Analysts at Hindenburg Research released a report on the company Friday saying that the company's stock — currently trading around $14.60 a share — has 85% downside. The firm slapped a meager $2 price target on the shares.

The company is "carelessly cutting corners in a field of specialized medicine, putting customer safety at risk," the analysts wrote.

The strongly worded report comes just weeks after SmileDirectClub's initial public offering posted the worst performance for a US IPO over $1 billion since 2007, according to data compiled by Bloomberg. It closed 28% below its offer price on the first day of trading.

The situation was so immediately bleak that SmileDirectClub's founders called JPMorgan CEO Jamie Dimon to ask what had gone wrong. The stock has traded even lower since as investors grow increasingly wary of increasingly wary of unprofitable unicorns like Uber, Lyft, and WeWork.

"SmileDirectClub is taking the startup approach of 'moving fast and breaking things'," analysts wrote. "In this case, unfortunately, they seem to be 'breaking' many of their customers' teeth." 

Here are the main reasons that Hindenburg is bearish on the company, highlighted in the report:

A number of state regulators and medical organizations have declared the company's practices illegal 

In at least two states including Alabama and Georgia, dental boards have enacted rules that make some of the company's practices illegal, the analysts wrote, noting that complaints have been filed with the Federal Trade Commision, the US Food and Drug Administration, and boards in at least 36 other states.

The Better Business Bureau has received more than 1,200 complaints about SmileDirectClub in its five years operating, according to the note. 

The American Dental Association and the American Association of Orthodontics have both spoken out against SmileDirectClub, alleging that it puts patients in danger by illegally practicing medicine. 

The company is "another profitless unicorn incinerating cash at an accelerating rate." 

Hindenburg called it "another ugly IPO that has somehow avoided even basic scrutiny," in the note, and expects that the stock will be further cut in half "several times over the next 6 to 12 months." 

SmileDirectClub has grown revenues 83% over the last few years, according to the note. But at the same time, it's substantially increased its net losses and cash burn. The company is on track for a 2019 run-rate of negative $196 million, more than its run rate of negative $114 million in 2018. 

Part of the problem is that the company has extended financing to about 65% of customers, according to the note. 

The company has $201 million in debt, according to a company filing. The largest piece is $151.3 million drawn on its JPMorgan revolving credit facility. All things considered, it's likely that the company will "re-tap the equity markets by the end of 2020," analysts wrote. 

"That, of course, assumes the company's operating metrics stay on the same course," they said.  

The company isn't just disruptive, it's putting customers at risk 

The report details many ways that the company is putting customers at risk, from recounting customer horror stories with at-home molds to problems with the company's aligners. 

In addition, the company has filed many lawsuits against critics and asks that dissatisfied customers who want a refund sign a release that prevents them from speaking out against the company. That includes filing negative complaints on social media, with regulators, and asks that they withdraw any previously filed complaints, according to The Capital Forum. 

Beyond the service, the analysts point out that disrupting dentistry has a low barrier to entry. There are a number of other companies that provide similar services, such as Invisalign, Uniform Teeth, Orthly, Candid, and more. 

Company response

SmileDirectClub wrote in a statement to Markets Insider that they view legal actions including the report as attempts to thwart competition. 

"Recently, there have been media statements by dental trade organizations and allegations in a class action lawsuit filed in Nashville federal court that purports to question the safety and legitimacy of SmileDirectClub's pioneering teledentistry platform," the company said in a statement sent to Markets Insider.

They continued: "There is no factual basis nor scientific or medical justification in these allegations to substantiate the false claims made about our model and the state-licensed doctors in our affiliated network." 

"Backed by evidence, SmileDirectClub denies the allegations made in the class action lawsuit and by these dental trade organizations and their members, and we will vigorously defend our business model against any entity working to limit consumer choice," the company said. 

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