Archive for the ‘ezBanc-A Stocklender’s Journal’ Category

Liquid Paper

Tuesday, June 5th, 2007

The problem:

There are over 1.3 trillion dollars worth of restricted securities (stock) trading on the U.S. stock exchanges held by thousands of corporate officers, directors and affiliates of publicly traded companies as well as both institutional and accredited investors.  As you will discover, most of this [restricted] stock is almost worthless to it’s holders as their ability to liquidate these shares has been heavily restricted by the Securities Exchange Commission (SEC) to protect public investors and the viability of the issuing company itself.  Because of this, this particular group of shareholders is often “paper-rich” and “cash-poor”.

As an example, imagine having an ATM machine in your home or office that holds $2,000,000!  That’s a lot of money, and you are a millionaire… congratulations!  Now imagine that the SEC will only allow you to withdraw a maximum amount of $2,000 every ninety days…  Still feel like a millionaire?

So what happened?  Well, in 1933, the (SEC) created Rule 144 to prevent these shareholders from taking actions that could be damaging to the companies that the shares were issued from as well as public shareholders of such companies.  Rule 144 says a lot, but probably the most noteworthy is that a restricted shareholder cannot sell more than 1% of the company’s total outstanding shares every 90 days.  For some this isn’t always such a bad deal, but for most it is liken to wearing solid gold handcuffs.
Enter the Stock Lending Industry

To meet the demand of shareholders seeking liquidity from their shares without selling, private lending companies began lending on free trading and restricted securities in the early nineties with some degree of success.  However as the industry grew, problems began to arise, as some lending firms began to use hedging strategies that were risky, and often would result in the inability for a borrower to reclaim their shares once the loan had been paid off.  Another problem that developed was that these loan programs caused many suits and began to come under scrutiny by the IRS or SEC, resulting in governmental litigation and a lot of unclear opinions as to what constituted a loan, what constituted a sell, and how one should be able to borrow against their restricted securities.

Because of these problems, the stock lending industry began to lose its luster and the search was on to create a better loan product that could give borrowers what they required, yet at the same time meet and exceed every regulatory and compliance hurdle that faced the borrower, lender and agents alike.
The New Solution:  Ajene Watson creates the True Loan™ Stock Loan

In October of 2006, a new loan program emerged that would change the face of the industry and solve every problem that lenders, borrowers, and agents had faced in the past.  Creating this new loan product wasn’t an easy task…  Four years in development, this new loan product has been now supported by a number of contributions from SEC, FRB and U.C.C. specialty attorneys, IRS and tax consultants, investment advisors, and even a former assistant deputy director of the SEC’s New York Enforcement Branch.

Aptly named the “True Loan™” by its creator, this new loan product is the only bona fide stock loan program available that can be obtained against restricted shares and still allow the shares to remain in the borrowers name, and all parties remain in full compliance with Federal Reserve Board (FRB), Uniform Commercial Code (U.C.C.), and most importantly, SEC regulations.
It allows an individual shareholder with those pesky restricted securities to borrow up to 80% of the assets value at interest rates as low as 4%, with terms ranging from 1-7 years, and the transaction is 100% private with no filings required.  Even the issuing corporation itself can utilize its treasury or restricted shares to obtain financing to replace debt, enhance acquisition purchasing power, or a host of other possibilities.

The best feature of the True Loan™, and this is what really sets it apart from anything else in the marketplace…  is that it is the only transaction offered by a private lender, that allows a restricted shareholder to receive non-recourse type financing, while the borrower’s shares are allowed to stay in certificate form, in an account, both being in their personal name. Why is this such a big deal?  It is a big deal because it means that a borrower [affiliate] will never have to worry about whether or not those shares will be returned when the loan has been re-paid, because they are safe and sound for the duration of the loan.  The borrower never has to be subjected to carrying the full liability of the loan, attach other assets, provide personal guarantees or be concerned with their creditworthiness.  The lender has no access to the shares which guarantees that the stock will never be traded, shorted, sold or exposed to any other type of risk.  This is an industry first and it’s a big part of what makes the True Loan™ a bona fide “true loan”.
But wait a minute…

You might be asking yourself why these shareholders can’t just go to a local bank or brokerage house, and obtain financing against their shares.  Actually they can, but the real question is would they really want to?

You see, banks and broker/dealers generally charge margin or maintenance fees, cannot offer LTV’s higher than 50%, usually charge high interest rates, and require personal guarantees and credit checks.  The most important thing you should know is that they typically will not even lend against restricted shares to begin with, especially those that are not marginable.

Now the “everyday” private lender on the other hand, can offer non-recourse loans with much higher LTV’s, much lower interest rates, do not require personal guarantees (other than the pledged shares), or credit checks.  A private lender however, typically cannot or will not lend against restricted shares, without the transfer of ownership.

So what sets ezBanc apart from other private lenders?  Simply stated, it is the True Loan™ program, which offers the same features as other private lenders however the one major difference is that the True Loan program will lend against restricted shares, and allow the shares to stay in the borrowers name, all in a non-recourse type financing environment…  an industry first.
So what does it all mean?

It means that shareholders holding restricted securities now have a viable option to allow them to receive much sought after capital without selling their valuable stock.  They can use the proceeds for such purposes as purchasing real estate, starting a new business or recapitalizing an existing one, or simply making a life-long dream come true.

For more information, contact:

It Doesn’t Take a Genius…

Tuesday, May 15th, 2007

Does it?

I’m coming to realize very quickly that in this world there are dreamers and there are doers.  There are those who take life at face value vs. those who face life head on.  Or more importantly, those that know it [life] only gets better with the more time and attention you pay to it.  Speaking of paying… how does the saying go?  Oh yeah, “you get what you pay for”.  So if you want to pay less, don’t expect to receive the most.  Pretty simply concept eh?

This certainly comes to mind when I reflect on one of the key factors of the True Loan Program (TLP) stock loan… the cost. 

I know that yesterday’s non-recourse stock loan afforded a shareholder the ability to finance their publicly traded securities with limited cost; unless of course the “agent/finder” didn’t find a way to gouge the client for upwards of a 10% finder’s fee.  It’s true.  I can admit it.  Yesterday’s stock loan created a breeding ground for the “Super Terms”.  You know… the highest LTV’s and lowest interest rates possible.  Why not?  The borrower received loans where there was absolutely no personal liability in the event of a default.  They could access the liquidity of stock that wasn’t even eligible for margin loans.  A shareholder could pledge OTCBB and Pink Sheet shares.  In some instances, they could receive loans as high as 90% LTV.  And, if they were really discreet about it, one could even illicitly lift restrictive legends on their restricted shares (particularly affiliates), convincing themselves that the securities were now “free trading” and eligible for a free delivery stock loan at a rate of 1% of the Issued and Outstanding. 

Wait a minute.  Is it me, or does all of this seem like some major benefits that should come with some major costs?  Oh… I forgot you get what you pay for.

Let’s face it.  When money is given away to us on a silver platter, we tend to lose all sensibility.  But think about it.  Yesterday’s stock loan required a borrower to transfer the ownership of their shares to the lender.  Did you hear me?  Transfer their shares to the lender; voting rights and all.  And we’re not even speaking of restricted stock or shares that remain certificated — only accessible or convertible into free trading stock upon a default.  No, we’re talking about shares in electronic form.  We are talking about securities that are in “street name.”  Freely Tradable Stock!  Oh Yes.  Someone is paying and they’re paying big.  But who is it?

The lender is in essence paying.  That’s right; at least in the beginning.  The lender is paying the borrower by providing all of those illusionary benefits because all that is cared about is one thing: taking free delivery of stock under the guise of a stock loan.  Wouldn’t you?  I mean, wouldn’t you give the best LTV’s and the lowest interest rates if it meant that you can get your hands on a bunch free trading stock at discounts steeper than that of a block purchase transaction?  Stock that you now have the ability to trade, short, sell, hedge, loan, pledge, hypothecate, margin, etc.  Of course you would.  The LTV only matters in a very competitive situation or where you have a slim profit margin for whatever the reason.  And interest… ha!  What’s interest?  With yesterday’s stock loan, for most lenders (not all, but the majority), it is just a formality.  You know; something that borrowers are simply used to seeing.  It is a negotiable item that allows a borrower to feel as if they made the best deal for themselves.  Hysterical! 

No, actually sad; especially when the borrower’s stock mysteriously declines in price as soon as their shares are transferred to the lender.   Or when an automatic default occurs and no one can explain what happened, but hey, the lender has enough shares to force the borrower into a default.  Or, at the end of the loan term, the borrower seeks to repay their loan and the lender doesn’t have the shares.  Or worse… the lender goes out of business during the term of the loan or simply runs off with the borrower’s shares.  I bet those high LTV’s and low interest rates just really look soooo great now!

Let me ask you this.  If I provided you with a True Loan stock loan and REQUIRED that you must take the stock out of street name and secure your shares in your own name (this meaning that not even your Broker Dealer can use the securities) would that catch your attention?  What if I INSISTED that your stock had to remain in an account in your own name or I could not provide you with a True Loan… would that bother you?  Let’s say you are an affiliate and do not want to file or need to use more than 1% of the issued and outstanding to satisfy your financial needs and I said, “No problem!  With the True Loan, because the stock indeed remains in your name, the transaction is truly private; and as there is no transfer of ownership, there are no filing issues and you can use as much stock as the market will bear”.  Would that suit you?  Or what if I told you that I can do all of this while providing you with LTV’s as high as 80% or 90% (restricted and free trading shares, respectively), within a non-recourse type of format that is a “bona fide” transaction complying with every body of law; especially where it applies to affiliates.  Would that make you smile?

And the only cost you have is a 5% interest rate!

Now if you’re in search of fool’s gold, the last line excited you most.  But if you a sensible borrower, cut from the cloth of the “Prudent Man Theory”, that cost would worry you sick.  Why?  Because discerning folks understand that you get what you pay for.  And with the True Loan, you get it all, and it is worth every dime. 

It doesn’t take a genius to figure this out… does it?

ezBanc is a Competent Merchant Banking Firm Delivering Quality

Saturday, April 28th, 2007

ezBanc offers investment banking, consulting and private lending services to high-net worth companies and individuals. Their primary investments are put in the growing real estate, hotel, and land development market, in addition to supplying structured financial products for public and private companies

They also offer individual investors a way to increase their portfolios through True Loan. True Loan is a trademarked service that only ezBanc offers. It is distinctive because it allows shareholders to completely own borrowed shares. True Loan also compliments estate planning programs and can act as an investment risk mitigation tool for investors.

The investment banking group is sought after by many investors for its services and superior quality.

For more information about ezBanc, please visit:  

ezBanc is a Merchant Banking Firm…

Wednesday, April 18th, 2007

ezBanc is a Merchant Banking Firm which specializes in delivering focused investment banking, consulting and private lending services to both high net worth individuals and companies, private and public. ezBanc’s main scope of transactions includes investments in real estate, hotel and land development, structured financial products for private and public companies (such as structured block purchases and Reg. A), as well as restricted stock lending programs. ezBanc’s recent inclusion of the True Loan Program (TLP) has allowed the company to garner the attention of the Mid Cap and Large Cap Markets, as well as the respect of prominent SEC legal professionals, hedge funds and individual investors

Shareholders seeking to access the liquidity of their securities opt to utilize the True Loan due to its focus on regulatory compliance, high LTV’s and secured lending process. With the True Loan, a shareholder can receive a non-recourse (or similar) loan while maintaining complete ownership of their securities. This is accomplished due to the True Loan requiring that all shares remain in the name of the client, within their own account (certificate/electronic form). The True Loan also compliments estate planning programs and can act as an investment risk mitigation tool for investors. Additionally, the True Loan can be structured to assist public companies in offering more competitive compensation packages to executives (or ESOP’s) or even enhancing the feasibility of corporate acquisitions.

ezBanc’s ability to seamlessly offer Merchant Banking, Consulting and Private Lending Services, which provides for practical funding solutions, makes ezBanc a sought after investment banking group.

Constant Fools

Wednesday, April 18th, 2007

My first days in this so called industry, were no more exciting than they are today. You wake up with this notion that what we have to offer the market is like something short of being the “Key to the Pearly Gates”. This golden opportunity that very few have to offer. “Hey guy, I’m giving you the chance to access the liquidity of your stocks without selling a single share or using that deadly instrument called Margin”.

Ohhhhh… you just know that any moment you’re going to have a mad stampede of elated borrowers and shareholders rushing toward your door. Hundreds upon hundreds of them yelling, “Me, me, me!”

Any fool entering the game for the first time looks at this as a “No Brainer!” Who wouldn’t want to pledge their stocks to get a LTV greater than 50%, not be subjected to margin risk, keep voting rights, maintain upside appreciation, no tax consequence, etc., etc., as the list goes on. “I can make a fortune doing this!” is the immediate reaction. So what happens next? A fool is as a fool does; gathers some preliminary information, makes a call or two and calls that due diligence”, aligns themselves with an agent of another agent of another agent who is connected to the capital source or claims to be the money, launches a website, opens up their doors for business and VOILA! A stock lender is born.

Sounds familiar? Well for those who’d like to pretend that their better and much more sophisticated than the others in this “high profile” and greatly respected industry, I do apologize for perhaps casting my blanket of assumption, but for all others who aren’t afraid of the truth, say Amen!

I for one was one of those fools! Ahhhh, and what a fool I was. And what an even bigger fool I might have become nearly seven years later. The stock lending industry was all but glamorous. All but sophisticated. All but completely legitimate. And yet, year after year, old fools were recycled with fresh ones. And those who endured are hopefuls, but fools none the less. For this we pray, that one day, all of us true romantics will actually survive to relish in a moment where all of the pains and ills of our past are vindicated by our persistent efforts to behold a brighter future. However, today… just for today, this future exists only in our dreams. But together, I know that we can make it a reality.


Ajene Watson

The Nerve!

Wednesday, April 18th, 2007

“CEO of Your Business Life or Your Personal Life?”

What exactly is the role of a CEO of a publicly traded company… or a CEO of any company for that matter? I mean, isn’t their job to oversee the ship and make decisions that dictate how you’re supposed to operate and behave professionally? I leave that to be answered later. But let me ask this question, should your CEO be allowed to make personal decisions on your behalf that directly affect your personal life?

When I say this, I’m not speaking of the hard choices a CEO must make on any given day such as cutbacks, pay cuts, curbing dividend payments or any other major or minor decision you can think of that may ultimately affect your income and employment. Ultimately affecting your savings, your lifestyle and your own personal financial outlook concerning your family’s future and estate. NO! I’m speaking of a CEO making decisions regarding your personal life without regard. Decisions that perhaps not even your significant other could have made entirely by themselves.

I’m saying: imagine a salesperson called your office to offer you “Wedding Financing.” I know, I know, what the heck is Wedding Financing? Just play along please. It sounded good and I’m sure it will follow the concept here, but I won’t know until I get there.

Anyway, this sales person calls to offer you Wedding Finance. For some reason the call gets transferred to your CEO or other superior. The CEO receives the pitch from the salesperson explaining the usefulness of this financing vehicle. At the end of the sales pitch the salesperson asks, “So Mr. CEO, do you think that you, Mr. Ineedmoney (intended contact) or any other executives in your company can use this product?” The CEO, without consulting with Mr. Ineedmoney or any of the other executives says, “No. Absolutely not! Mr. Ineedmoney would not be interested in that, he’s married and so are all the other executives here.” Now, how exactly did the CEO know this to be true without asking Mr. Ineedmoney? Is it me, or did the CEO just overstep his bounds and make a personal decision for his employees that may effect their personal lives based on his own assumption. Shouldn’t a CEO restrict their decisions to business issues that may happen to affect the personal lives of employees? Is this right? Is this ethical? Personally, I simply could not make a decision for my employees that have nothing to do with the company. They’re adults, with their own lives, ambitions and personal financial needs!

Over the past seven years, I’ve seen, heard and personally experienced just about everything concerning my love… Stock Lending that is. This is one of those little things I never understood. How is it ethically correct that a CEO can make a personal financial decision on the behalf of their executives? I’m not saying any names here, but it happens all of the time; and it could have happened to you!
“What on earth are you rambling about, Ajene?”

The other day I was speaking with a CEO of an AMEX company about a stock loan for him, his executives and the public entity. Now, I do not wish to seem ungrateful being that the True Loan Stock Loan was received very well by the CEO with regards to a corporate transaction. But at the close of the call, I still got off the phone pissed off!

Do you know that when the topic of perhaps the company’s executives using a stock loan in order to avoid the need to sell shares or incur filing issues, create a market hedge, access liquidity and all that other finely crafted stuff we say; you know what this CEO’s response was? “No one here would be interested in that.”

OH, I’m sorry Mr. “CEO”.

This answer has always gotten under my skin simply because it is a complete assumption. What if Mr. & Mrs. Ineedmoney were indeed planning their daughter’s wedding and Mr. CEO didn’t know about this because he wasn’t invited? How would Mr. CEO then know that while he’s making assumptions, poor Mr. Ineedmoney is sitting home at night tearing his hair out trying to figure exactly how on earth he’s going to cover the cost of his little girl’s big day!

Mr. Ineedmoney doesn’t want to sell his stock holdings because its part of his net worth. He can’t get a margin loan. He doesn’t want to mortgage the family’s property. And although he’s worth $3 million in Affiliate Restricted Stock, earns $300k annually and has a cash savings of $180k, he can’t afford his baby girl’s wedding. Can anyone say True Loan?

Oh well…never mind a True Loan or any other stock loan. Mr. Ineedmoney is seriously SOL because the CEO of his business life decided that he also had the right to assume the same in Mr. Ineedmoney’s personal financial life. Wow. I mean am I the only one who thinks this is inappropriate?

Well, I don’t know about anyone else here, but as a youngster I was taught well, to ass-u-me meant too make an a…well, I trust you know the rest.

Let’s put selling the True Loan Stock Loan aside for the moment. My office, any of our few competitors or our friendly agents could have been the group to call this CEO offering Wedding Finance. And while there might have been an executive out there who desperately needed such financing, the opportunity was lost because the CEO did not allow INFORMATION to be disseminated amongst his executives so that they could make their own decisions concerning their own personal needs. Instead, the CEO casually and without regard, made a decision concerning the personal financial needs of the executives for them. Where does the line get drawn?

If this is the case, CEO’s might as well have the liberty to enter each executive’s home and critic their every purchase, sale, credit card, bank loan or other personal financial decisions. Like, “No Mr. Ineedmoney, you certainly don’t need that Annuity.” That’s extreme I know, but the core premise of the topic is a ridiculous action to begin with. And extremes do start somewhere.

If I call someone offering the best product the stock lending industry has to offer to date, hands down, and it doesn’t suit their needs, fine. We all can accept that no matter how great something is, it might not be for everyone. But if I ask, do you think any of your fellow executives would be interested in this strategy? Unless you’ve peered into your magical crystal ball and predicted the reception of my sales call that day, rounded up the executive troops and came to a consensus against my offer yet to be made, your answer had better be, “I DON’T KNOW. YOU’D HAVE TO ASK THEM.” Unless of course you’ve been blessed with mind reading abilities.

Believe me, this happens all of the time. If you’re a stock lender or agent making cold calls, you’ve experienced this in some form or another. If you’re the receiver of one of these sales call (CEO, CFO, COO, etc.), you’ve probably committed this highly questionably unethical act….unethical at least in my mind but who am I? And if you’re the executive who could have benefited greatly from a True Loan Stock Loan because you needed the money or just wanted to protect your interest against adverse market conditions, or even perhaps just would have been interested in learning more about how True Loan transactions keep stock in your name within your own accounts…guess what?

You Got Screwed!

Face it, obviously your superior is not only your professional authority, but when seen fit, becomes your personal CEO as well. The worse part…you’re typically oblivious to it.

Sorry Charlie.

I guess on the face of it all, you can simply call a CEO’s assumptive reaction in these cases a “reptilian response.” So sadly, no matter how much I moan, it won’t make a bit of difference.
So, as the saying goes, “It is what it is.”


Ajene Watson