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The Global Alternative Trading Engine (GATE) opens markets by bringing best practice technology and platforms to existing and emerging markets. Working with market leading partners in each vertical, GATE's platform enables the listing, transaction, and settlement of illiquid, alternative, and... More
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  • IP Assets Need a Better Marketplace
    Intellectual property is an asset and often a valuable one at that.  Just ask Nortel which recently went belly-up but its intellectual property was gobbled up for well over $1 billion.  The beneficiaries of such an asset fire-sale were Avaya, Nokia, Research in Motion and Siemens, among others.  However, Nortel was a special case where the company was clearly in distress and made it known that they wanted to sell their entire portfolio of over 4,000 patents to the highest bidder. A blog published by Intellectual Asset Management Magazine details a recent occurrence involving Micron Technologies and their intellectual property and patents.  It appears that the company has sold a substantial portion of their IP assets to an NPE, but has notIntellectual Property rights disclosed the terms with shareholders.
    I then started to wonder about the sales process that saw Desmarais secure the patents, especially as the company's shareholders never seem to have been told that it had happened and the portfolio represented around 20% of the patents and related assets Micron owned. Given that number and given the quality of the portfolio, surely the sale price should have been high enough for it to be a material event. If it wasn't, had something gone wrong with the sales process so that the sum raised did not reflect the portfolio's value? And if that were the case, shouldn't shareholders want to know? -- Why Micron matters 7/7/2010
    The company has made little to no effort to inform shareholders of the value of the transaction which may suggests that the price was deemed insignificant.  However, it should still have been reported to shareholders that one-fifth of Micron's patents are no longer under their control. At GATE, we see this as more evidence that a more transparent and liquid market for alternative assets such as IP and patents is so desperately needed.  It would have made bidding for Micron's assets more competitive and would likely have demanded some sort of recognition of the sale from management in the form of a press release.  For Micron, we see no reason that they should not manage the company and its assets in whatever way they see fit, but they should also be forthcoming with investors wherever possible.  In this case, it appears that they fell short.

    Disclosure: No positions
    Tags: IP, OTP
    Jul 08 6:26 PM | Link | Comment!
  • Listed Shares Are Not Necessarily Less Risky Than Unlisted
    For many investors, the conventional wisdom holds that stocks listed on US exchanges have at least some regulatory oversight to protect investors.  However, an article published in today’s Wall Street Journal turns that notion on its head.  According to this report, the Securities and Exchange Commission—charged with regulating US exchanges—has been asleep at the wheel.
    “On Jan. 6, 2009, Ukragro Corp. of Zhitomir, Ukraine, made an initial filing with the Securities and Exchange Commission to sell stock to the public. Its sole employee and owner was a 79-year-old massage therapist. The company had no revenue, $100 in assets and planned to open a string of health spas. Public records on file at the SEC show that the agency asked no questions and the application cleared through the commission eight days later. Over the past two years, eight other start-ups reviewed by the SEC have been similarly headed by people in Ukraine or Russia, with no revenue or operations and minimal assets. Business plans ranged from renting bicycles in Kiev to selling cars in Siberia. All used the same small Seattle law firm, Dean Law Corp., to help with their initial SEC filings. The SEC cleared them to sell stock, in most cases without asking a single question, according to the public records at the agency…”
    head buried in the sandIt goes on to say that many of these applications were approved in a matter of days without so much as one question asked!  There is even speculation that these filings were not even read by the regulators assigned to protect investors from fraudulent activity or scams.  It continues,
    “After Ukragro cleared the SEC, the shell company changed its name in September to Windsor Park Forex Inc. before it was acquired in January by Ron Ruskowsky, who became president and controlling shareholder. He changed the company's name again, to Amarok Resources Inc., relocated it to California and refocused its business to prospecting for gold in Nevada and elsewhere. It still hasn't reported revenue and has yet to strike gold but has announced raising $2 million in private stock placements. Its stock has gone from pennies a share to as high as $2.75 a share, giving the company a market value of nearly $200 million. It currently trades at about $1.30 a share on the OTC Bulletin Board under the symbol AMOK. Mr. Ruskowsky said he had nothing to do with the company's previous management. He said that in order to bring to market what he views as a promising gold-mining prospect, he purchased the Ukragro shell, which is permissible, without really looking into its past. Since Ukragro had passed through the SEC, Mr. Ruskowsky said he assumed "it should be clean.”
    A company with little to no track record of doing anything is now worth nearly $200 million in over-the-counter trading.  The fact remains that investors have the ultimate responsibility to be aware of what they are invested in, but I am not alone in assuming there was some sort of regulatory oversight to make sure listed stocks were more than just a hollow shell company.  To be clear, this is not a judgment on the company featured in the WSJ article or their future prospects; rather, we want to make investors aware that some of the traditional responsibilities of the SEC maybe more relaxed than some investors think.  Buyers beware when it comes to any security; whether it be traditional-listed stock or alternative illiquid securities.
    Jun 29 12:04 PM | Link | Comment!
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