EDGAR Online's SECrets Newsletter Editor: Timothy Middleton, EDGAR Online Analyst mailto:editor@edgar-online.com ***INSIDE THIS ISSUE NEW AND NOTEWORTHY: SEC Warns on Pre-IPO Fraud QUESTION OF THE WEEK: Schedule 13D ON THE INSIDE: TCF Financial Insiders are Sellers COMPANIES MENTIONED IN THIS ISSUE PEOPLE MENTIONED IN THIS ISSUE /----------ADVERTISEMENT--------------------------------\ Starved for food for thought? The free Business 2.0 Daily Insight newsletter delivers easily digestible business insights. Subscribe today at http://live.doubleclick.net/business2-0/Biz20_sec.html \-------------------------------------------------------/ ---------------------------------------- *** NEW AND NOTEWORTHY *** ---------------------------------------- SEC Warns on 'Pre - IPO' Fraud Federal regulators have detected an increase in fraudulent securities offerings online and are warning investors to be careful of online securities sales. Regulators are also warning investors to be wary of ``pre-IPO'' stock offerings - i.e. opportunities for investors to get a "jump" on the market before the firms go public. The SEC has recently charged several offending companies with fraud. On Thursday, the SEC said it had reached a settlement with Austin, Texas-based 1stBuy.com Inc., a company that operates an Internet retail site. Roger D. Pringle, the company's founder and chief financial officer, neither admitted nor denied wrongdoing in agreeing to the settlement of the SEC's allegations, but agreed to pay a $25,000 fine. Regulators say 1stBuy.com raised $3.8 million from 1,200 investors nationwide by making false and misleading statements about an IPO, and by referring to the offering as a ``pre-IPO.'' According to the Associate Press, it was the fourth such action by the SEC recently. Since March, the SEC has alleged that three Internet companies, New World Web Vision.com, Y2K Highway Inc. and Stadtt Media LLC, committed securities fraud by making false claims about IPOs. All three cases are pending in federal court. ---------------------------------------- *** QUESTION OF THE WEEK*** ---------------------------------------- QUESTION: What is a Schedule 13D? ANSWER: Schedule 13D is an SEC document that must be filed by any person or entity acquiring direct or beneficial ownership of at least 5% of any class of a company's outstanding shares. The purchaser must file Schedule 13D within 10 days of reaching the 5% ownership threshold, and all subsequent trades must be stated promptly on an "amended" 13D. The purchaser must also indicate their intention of ownership - i.e. passive investment or takeover attempt. The purchaser must also file a 13D with the company itself, and with the stock exchange on which the shares are listed. ---------------------------------------- ***ON THE INSIDE*** ---------------------------------------- TCF Financial Insiders are Sellers Regional banks have defied a broader rally this year in the financial services sector. While the financial services sector is ahead 7.7% through July, according to Standard & Poor's, the average regional bank stock was down 3.3%. Not so shares of TCF Financial Corp (TCB). They are up 57% this year, not including dividends paid in February, May and August. The holding company for TCF National Bank and TCF National Bank Colorado, which operates in five upper Midwest states, likewise hiked its quarterly payout during the period to 21.3 cents a share, from 18.8 cents. Insiders have shown prescience in the past, selling into strength in their company's stock just ahead of sometimes-steep declines. Lately, they've been selling again. In the last two months, five of them have filed Form 144s with the SEC that indicate the sale of more than 200,000 shares, according to Thomson Financial/First Call. Most recently William A. Cooper, chief executive, reported on Aug. 23 selling 90,000 shares for $32 apiece, or nearly $2.9 million http://www.edgar-online.com/auth/doctrans/default.asp?doc=B-117264 TCF has prospered in part because it has managed to boost deposits significantly. In general, says James F. Catudal, manager of Fidelity Select Financial Services Fund, (FIDSX): "Regional banks are right now funding loan growth with purchased money. They're not able to attract low-cost deposits from customers anymore." That's exactly what TCF has managed to do, however. On Sept. 9, it announced that its network of branches in supermarkets had topped $1 billion in deposits, or nearly 10% of the bank's total. TCF is the fourth-largest operator of bank branches in supermarkets, with 212 of them. In the Chicago area, TCF claims to have the second-highest number of non-interest bearing retail checking accounts. Thomson's Paul Elliott says Cooper "last sold shares in November of last year, ahead of a 35% decline" in the company's stock. Another prominent seller has been Timothy P. Bailey, president of the company's Wisconsin operations. He filed Form 144 on July 26 http://www.edgar-online.com/auth/doctrans/default.asp?doc=B-113165 reporting the sale of 4,000 shares for $29.88 per share, or about $119,500. A spokeswoman for TFC said, "We do not comment on insider selling transactions." /----------ADVERTISEMENT------------------------------------\ DON'T MISS OUT ON YOUR CHANCE TO WIN AN IBM THINKPAD 600X Register now for any of ITworld.com's weekly IT email newsletters, and enter our sweepstakes for your chance to win a powerful new IBM ThinkPad 600x. CLICK HERE! http://www.itworld.com/sweeps/sweepsim.html?impsite=9235 \----------------------------------------------------------------/ --------------------------------------- *** IPOs ON DECK FROM IPO EXPRESS*** ---------------------------------------- USER NOTE: Before a company can go public (that is, sell shares on an exchange), it must file an S-1 form with the SEC. The S-1 document, easily accessible via EDGAR Online, i extensive and includes such information as: risk factors, financials, strategy, industry trends, management bios, investors and more. IPOs on Deck Kyphon Inc. (KYPH) of Sunnyvale, CA http://www.edgar-online.com/ipoexpressn/company.asp?company=4998 EDGAR INSIGHT: Kyphon Inc. filed Sep. 13 for an IPO. US Bancorp Piper Jaffray Inc. is the lead underwriter. The proposed offering is expected to raise $57.5 million. The company makes orthopedic devices for spine treatment, with over 300 U.S. physicians trained in the use of their products. Warburg Pincus Ventures L.P. has a 49.5% stake in the company. Monolithic System Technology Inc. (MOSY) of Sunnyvale, CA http://www.edgar-online.com/secrets.asp?d=A-890394-0000912057-00-041425 EDGAR INSIGHT: Monolithic System Technology Inc. filed Sep. 14 to set its price at $9-$11 per share and its number of shares to 5 million. JP Morgan Securities Inc. is the lead underwriter. The proposed offering is expected to raise $63.3 million. The company markets the embedded-memory technology 1T-SRAM and has strategic relationships with Lucent Technologies, Nintendo Corp., and NEC Corp. The 37-employee company's revenues were $15.4 million in 1999. Novatel Wireless Inc. (NVTL) of San Diego, CA http://www.edgar-online.com/secrets.asp?d=A-1022652-0000950150-00-000764 EDGAR INSIGHT: Novatel Wireless Inc. filed Sep. 14 to set its IPO price at $10-$12 per share and the number of shares at 7 million. CS First Boston Corp. is the lead underwriter. The company is a leading provider of wireless communications access solutions, with customers including Verizon Wireless and AT&T Wireless. The 248-employee company's revenues in 1999 were $9.6 million. Deals Undone Intellisys Group Inc. (ISGP) of Mountain View, CA http://www.edgar-online.com/ipoexpressn/company.asp?company=2924 EDGAR INSIGHT: Intellisys Group Inc. filed Sep. 13 to withdraw its IPO. Wedbush Morgan Securities Inc. was the lead underwriter. The offering had been expected to raise $18 million. The company installs audio, video and data networking systems, and clients include Netscape, NASA-Ames Research Labs and Stanford University. Insession Technologies Inc. (INSX) of Hinsdale, IL http://www.edgar-online.com/ipoexpressn/company.asp?company=4759 EDGAR INSIGHT: Insession Technologies Inc. filed Sep. 14 to withdraw its IPO. Salomon Smith Barney Inc. was the lead underwriter. The proposed offering was expected to raise $70 million. The company provides e-business software and service for related applications, and has 340 customers worldwide. The 161-employee company's 1999 revenues were $39.6 million. Deals Redone Luminent Inc. (LMNE) of Chatsworth, CA http://www.edgar-online.com/ipoexpressn/company.asp?company=4866 EDGAR INSIGHT: Luminent Inc. filed Sep. 13 to change its ticker symbol to LMNE from LUMN, and to set its price at $13-$15 per share and offer 12 million shares. CS First Boston Corp. is the lead underwriter. The projected offering is expected to raise $155 million. The company is a maker of fiber optic components, and is a unit of MRV Communications (MRVC), an optical component and network company that will own approximately 92% of Luminent Inc. after the IPO. Hydrogenics Corp. (HYGS) of Woodbridge, Ontario, Canada http://www.edgar-online.com/ipoexpressn/company.asp?company=4875 EDGAR INSIGHT: Hydrogenics Corp. filed Sep. 13 to set its IPO price at $10-$12 per share and offer 7 million shares. The 63-employee company tests fuel cells for General Motors (GM), the U.S. Army and other companies and institutions. The testing stations are billed as "environment friendly" because water and heat are the main byproducts. Salomon Smith Barney Inc. is the lead underwriter. /----------ADVERTISEMENT-----------------------------------------\ Advertise in the SECrets newsletter and get in front of the leaders in the financial community. Go to http://www.edgar-online.com/advert.asp for more information. \----------------------------------------------------------------/ ---------------------------------------- **COMPANIES MENTIONED IN THIS ISSUE*** ---------------------------------------- 1stBuy.com Inc AT&T Wireless CS First Boston Corp Fidelity Select Financial Services Fund General Motors Hydrogenics Corp Insession Technologies Inc Intellisys Group Inc JP Morgan Securities Inc Kyphon Inc Lucent Technologies Luminent Inc Monolithic System Technology Inc MRV Communications NASA-Ames Research Labs NEC Corp Netscape New World Web Vision.com Nintendo Corp Novatel Wireless Inc Salomon Smith Barney Inc Stadtt Media LLC Stanford University TCF Financial Corp U.S. Army US Bancorp Piper Jaffray Inc Verizon Wireless Warburg Pincus Ventures LP Wedbush Morgan Securities Inc Y2K Highway Inc ---------------------------------------- **PEOPLE MENTIONED IN THIS ISSUE*** ---------------------------------------- Bailey, Timothy P. Catudal, James F. Cooper, William A. Elliott, Paul Pringle, Roger D. ---------------------------------------- ABOUT THE EDITOR ---------------------------------------- SECrets is written by EDGAR Online Analyst, Timothy Middleton. Timothy has covered business and financial topics for The Wall Street Journal, The New York Times, Dow Jones News Service and Crain's New York Business. Twice nominated for the Pulitzer Prize in investigative journalism, his weekly business reports can be heard on WCBS Radio and Microsoft MoneyCentral Radio. For press, syndication, and advertising inquiries, contact Group Publisher Hank Berkowitz at mailto:hberkowitz@edgar-online.com ---------------------------------------- Copyright 2000, EDGAR Online, Inc. http://www.edgar-online.com ---------------------------------------- DISCLAIMER: The EDGAR Online report contains observations of its editor Timothy Middleton, a consultant of EDGAR Online and is for informational purposes only. These statements and expressions are the sole opinions of Mr. Middleton and EDGAR Online does not endorse nor necessarily agree on such statements and expressions. Factual statements in this report are made as of the date stated and are subject to change without notice. Nothing contained herein shall be deemed to be recommendations to buy, hold or sell securities nor shall it purport to be a complete analysis of the companies mentioned. While the information contained in this Report and the opinions contained herein are based on sources believed to be reliable, neither Mr. Middleton nor EDGAR Online have independently verified the facts, assumptions and/or estimates that may be contained in this Report. 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