Due diligence is another way of saying “double-check all the facts before entering into an agreement.” For example, an investment banker performing due diligence would check to make sure that a company’s sales actually match the amount that management claims. The person performing due diligence takes responsibility for checking out the details of a potential investment or acquisition so that investors can trust that the company checks out.
A broker-dealer is a firm that buys and sells securities for both the firm (dealer) and others (agent) and is registered with the SEC. An agent works on commission for his clients, and a dealer works as principal. Broker-dealers do both at different times.
Peter Osgood is a seasoned communications expert and trusted advisor to business and nonprofit leaders. This week, he shares some of the lessons he’s learned from a lifetime of communicating with people, from the U.S. Army to investor relations and beyond.
TILE: How did you get where you are today?
Peter: Always listening, questioning and trying to understand what others are saying and feeling while applying the values which transcend the countries, religions and cultures and economic environments in which most of us live. I’ve also tried to accumulate my experiences and apply them thoughtfully to the issues we face today.
TILE: How does what you do affect the world at large? Why should I care about what you do?
Peter: What I do today is only as important as my ability to provide meaningful counsel to my clients as they make their own value judgments in their professional environments. I believe I now provide guidance based on cumulative experiences and a modicum of understanding of the environment in which we live. You don’t need to care about what I do, but you do need to have some “voices of experience,” those who can help you shape and improve your own frame of reference. I’ve always had them, and still do.
TILE: How do you break tough news to a group of investors?
Peter: There are many kinds of investors, or stakeholders. Some invest money. The Golden Rule applies across all type of investors and all the time. Be honest. Be transparent. In the long run it was, is and will be the best rule. And, don’t discriminate. It tends to compromise and devalue. The other rule is, when the news is bad, tell them why and what is being done to overcome the adverse news. And, get the bad news out as soon as you know it.
TILE: What’s the best advice you would give your teenage self?
Peter: Assuming I didn’t grow up knowing I wanted to be a nuclear scientist, my advice to myself would be to pay more attention to all aspects of my liberal arts education, being more attuned to learning and questioning. I would advise myself to become more aware of what was going on outside my U.S. environment, my economic environment, my own religion (or lack thereof), and most important, I’d ask myself to spend more time caring about others and how they think. I wouldn’t want to have been such a “know-it-all,” or better-phrased “opinionated.”
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A dark pool is a financial term that describes an alternative – but legal – venue for trading large orders of stock. What makes trading through a dark pool different from regular trading? Well, there are a few key differences, but the most important is anonymity. When a trade occurs on an exchange like the New York Stock Exchange, the prices that are negotiated between buyer and seller are immediately reflected in the market and published for anyone to see. In a dark pool, there is actual anonymity between the buyer and the seller and the trade is not shown in the market.
In a dark pool, trades occur between institutional investors that are trading large blocks of equities. For example, Institution A has 500,000 shares of Microsoft (MSFT) and wants to sell them. If that institution were to trade all of those shares on an exchange, they would have to split the transaction up into several smaller trades in smaller amounts. Not only would those trades disrupt the market (make it unsettled), but Institution A would also be showing their hand. If they show their hand, it might disrupt the market further, and other institutions would likely capitalize on that information.
So basically, a dark pool is a place where institutional investors can come and anonymously buy and sell large blocks of equities in one or a few orders. By doing this away from an exchange, they do not disrupt the market because the price is not fixed on a public market. Also, other institutions and the public do not know immediately that a large block of stock was bought or sold. Only after the trade is filed with the SEC will the public know what the institution did.
Thinking about a job on Wall Street? If you don’t already, you should know they take their compensation and benefits very seriously…
“Compensation played a role in the financial crisis, and yet nothing has changed.” – J. Robert Brown, Professor at University of Denver Law School
The obvious answer seems to be that a person or company is worth however much money they have, but that number isn’t always easy to figure out. It can be hard just to figure out how much money you have in the bank at any given time: you can print out an account statement, of course, but what about all the checks you’ve written and purchases you’ve charged to credit cards that have to be deducted from that number? How do you come up with a number that reflects what you’re really worth?
This number is called net worth. For both people and corporations, net worth is represented as total assets minus total liabilities. But even though the equation is simple, the calculations can be complicated. Anything of monetary value is considered an asset; any debts or payments you’re obligated to make constitute liabilities. So your house is an asset, but your mortgage is a liability. Your car is an asset, but your lease payments are a liability. Your salary is an asset, but your bills are all liabilities. You have to take all these little additions and subtractions into account in order to figure out your net worth.
Revenue is the total amount of money received for a service or sale. For example, if you were to sell 100 apples on the street for $1 each, your revenue would be $100.
Joel Hollander has worked behind the scenes in the radio business throughout his whole career. He has successfully led and turned around several media companies, served as President & CEO of both CBS Radio (formerly Infinity Broadcasting) and Westwood One Inc., and is one of the major players in creating the future of radio. He’s currently working on a new project – 264 Echo Place Partners, a strategic advising firm. Joel took a moment to tell us about what it took to get where he is, and what tomorrow’s radio looks (er, sounds) like.
TILE: How did you end up where you are today?
Joel: A lot of hard work along the way. Always taking calculated risks at the right moment to move up the ladder. I’ve found that being a good listener, aggressive, punctual, and making decisions swiftly are good traits of a leader.
TILE: How does what you do affect the world at large?
Joel: Music, sports, entertainment, and technology are great vehicles to help people to relax and get away from their everyday routines.
TILE: What is the future of radio?
Joel: Radio has been around for decades and has been an incredibly successful industry. As in most American industries, technology has changed radio. It has morphed into an audio business in other forms: Internet radio, iPods, Blackberries, HD radio, etc. Radio now exists in many different forms, though there are still 235 million people in the U.S. that listen to traditional radio every week.
TILE: What’s the best advice you would give to your teenage self?
Joel: Be aggressive. Get as many internships as you can while in school – it will only help when you graduate. Start working at an early age to cultivate the work ethic you will need down the road!
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An investment bank is an institution that serves as an agent for corporations that are issuing securities. Investment banks do not accept deposits or offer loans like regular banks. Instead, they tend to help with mergers and acquisitions, corporate restructuring or companies that are going public.
The opening bell for the New York Stock Exchange (NYSE) has rung at 9:30am since 1985 when it was changed from 10:00am. The bell starts the daily trading session, which is the time in which all stocks are bought and sold on the trading floor. Until relatively recently, the technology to trade stocks from outside the trading floor didn’t even exist, so the trading session was really the only time when trading took place.
Now trading can be done at all hours from anywhere on the planet – even from your cell phone. However, the majority of trading is still done during the trading session. The board of the NYSE has discussed several times making the bell earlier to extend normal trading hours, but the hours haven’t changed for over 20 years.