CHOOSING MERGERS CAREFULLY
Reverse mergers involving Chinese companies have come under heavy scrutiny this year. But that doesn't mean financial advisors have to steer clients away from them entirely. Instead, advisors should probe to help sift bad actors from sound investment opportunities, says Cavas Pavri, a Philadelphia securities lawyer with Cozen O'Connor.
Many Chinese operating companies have gained listings on U.S. exchanges by arranging for dormant public U.S. companies to buy their assets. In April, the SEC set up a task force to examine suspected abuses by certain Chinese firms that gained U.S. market exposure and then suffered major downturns. Advisors should be sure to vet the foreign firm's auditors, Pavri says.
"A top 10 auditor is important," he says. Advisors should check to see whether the firm has an independent and strong corporate governance board, and if it has an active audit committee. If the firm has raised capital, chances are the process involved a reputable investment bank, which may have done its own careful due diligence. Also, it's worth finding out where the chief financial officer of the newly listed entity is based. If the CFO works outside the U.S., that could raise concerns about accounting practices, Pavri says.
REAL ESTATE SOLUTIONS
Commercial property services companies typically do business with investors directly. Now two firms have decided to bring advisors into the conversation. Real estate company NAI Global and Edge Advisors, an investment banking firm specializing in illiquid assets, have created NAI Intelligent Edge.
The platform can help wealth managers assist clients in selling or financing commercial real estate and other illiquid holdings. "We are specifically dealing with concentrated wealth of all forms," says Tom Boczar, CEO of Intelligent Edge. In managing illiquid assets, clients and asset managers do not always consult the financial advisor, resulting in decisions that might impede a client's financial planning goals, Boczar says.
ON THE MOVE
Deborah Fuhr has left U.S. asset management giant BlackRock to head up the global ETF equity futures and derivatives strategy at Bank of America Merrill Lynch. She will also market the firm's exchange-traded funds. BlackRock will shift her former responsibilities to the BlackRock Investment Institute, formed in April to educate investors about ETFs.
Lincoln Financial Distributors, the Philadelphia-based wholesale distribution subsidiary of Lincoln Financial Group, has appointed Tom Tooley as head of insurance solutions distribution. Previously, Tooley was national sales manager at Lincoln for its independent planner channel. Tooley had also been a senior executive responsible for life insurance distribution at the Hartford.
Jonathan Firestein has joined U.S. Bank as head of private capital for Ascent Private Capital Management, a unit of U.S. Bank's wealth management group. Firestein will spearhead the creation of a private capital investment platform for Ascent's clients, which will include venture capital, social and environmental impact, real estate and private debt. Previously, Firestein was director of research for Wells Fargo Family Wealth, and was a senior associate at Rigel Associates, a private equity firm. -DM