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JPMorgan creates new team to trade shares of pre-IPO giants including SpaceX, Robinhood and Airbnb



JPMorgan Chase thinks it’s found the next hot market for investors:  Taking stakes in giant, pre-IPO start-ups from SpaceX to Airbnb.

The investment bank is launching a new team to connect sellers and buyers in the burgeoning market for private company shares, according to Chris Berthe, JPMorgan’s global co-head of cash equities trading. He’s lured Andrew Tuthill, a senior VP from trading platform Forge Global, to head up the new team.

“Many of our clients are looking at this as the next frontier,” Berthe said. “What do you do when markets get so high? You’re going to keep looking at value down the chain, and maybe that means getting involved in companies at earlier stages of their lifecycle.”

More than a decade ago, it was much more common for companies to go public earlier in their development, allowing investors to participate in the rise of winners like Amazon and Google. Then plentiful venture capital funding allowed companies to stay private for years longer, leading to a proliferation of unicorn start-ups. There are now 493 unicorns worth more than $1.5 trillion, according to CB Insights.

But that rise has meant that more investors have been shut out of lucrative gains. Case in point: Shares of Uber still trade below the company’s IPO price from more than a year ago, while Uber’s early stage VC investors have made billions.

That caused institutional investors including hedge funds to ask JPMorgan to source stock in private companies, including the Elon Musk-led SpaceX, Airbnb, Robinhood, Palantir and even TikTok, Berthe said. Tiktok is embroiled in an international controversy over the Trump administration’s demand that it sell its U.S. operations to an American company.

Andrew Tuthill, head of JPMorgan equity private market liquidity (L), and Chris Berthe, global co head of cash equities trading (R).

Source: JP Morgan

At the same time, JPMorgan is seeing more demand from company founders, venture capital funds and wealth management clients to sell their stakes in private companies, he said.

The market for trading private company stock is dominated mostly by boutique brokerages based on the West Coast with names like EquityZen, SharesPost and Forge.

Berthe said he believes that New York-based JPMorgan is the first major Wall Street bank to create a team dedicated to trading private shares. People with knowledge of the operations of Goldman Sachs and Morgan Stanley said that while the firms don’t have dedicated teams, they have been facilitating trades in this market for years. In particular, Morgan Stanley last year acquired Solium, a leading manager of corporate stock plans, giving it access to a wide swath of start-up equity.

Unlike shares in public companies like Microsoft, trading in private company stock is complicated and still mostly the domain of old -school voice trading, versus electronic exchanges that close transactions in seconds. Once a trade is negotiated, JPMorgan has to transfer legal ownership of contracts and get clearance from the start-up, a process that can take weeks.

“The shares are not listed, so whenever an investor buys into those companies, there’s different share classes,” Berthe said. Further complicating matters is that “companies very often include a right-of-first-refusal clause and they can block a transaction between a buyer and a seller for various reasons, generally because of price or because they might have concerns with the buyer.”

Tuthill is tasked with connecting buyers and sellers from across JPMorgan, including investment banking clients, wealth management and trading teams, which should create a deeper market for the asset class.

“Companies are staying private for longer and that dynamic doesn’t look like its changing anytime soon,” Berthe said. “The more the market rallies, the more people are going to want to look at alternatives.”

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Parler website partially returns with support from Russian-owned technology firm | Social media




Parler, the social network popular with Donald Trump supporters, has partially returned online with the help of a Russian-owned technology company.

The network vanished from the internet after it was dropped by Amazon’s hosting arm and other partners over a lack of moderation after its users called for violence and posted videos glorifying the attack on the US Capitol on 6 January.

On Monday, Parler’s website was reachable again, though only with a message from its chief executive, John Matze, saying he was working to restore functionality.

The internet protocol (IP) address it used is owned by DDos-Guard, which is controlled by two Russian men and provides services including protection from distributed denial of service attacks, infrastructure expert Ronald Guilmette told Reuters.

DDoS-Guard’s other clients include the Russian ministry of defence, as well as media organisations in Moscow. Until recently, it offered 8kun – which was previously known as 8chan – protection from DDoS. Last week, DDoS-Guard became the latest company to cut ties with 8kun’s hosting company, VanwaTech, following inquiries from the Guardian.

If Parler’s “free speech” website is fully restored, users would be able to see and post comments. Most users prefer the app, however, which remains banned from the official Apple and Google stores.

Matze and representatives of DDoS-Guard did not reply to requests for comment.

On Wednesday last week, Matze told Reuters the company was in talks with multiple service providers but declined to elaborate.

DDoS-Guard was registered in 2017 under a limited partnership, a financial structure in Scotland that allows nonresidents to create companies with little scrutiny. Aleksei Likhachev and Evgeniy Marchenko, two Russian businessmen who registered it, remain owners of the company. The partnership under which DDoS-Guard is registered is called Cognitive Cloud and is listed at an address in Edinburgh’s Forth Street.

Speaking from the southern Russian city of Rostov-on-Don last week, Marchenko told the Guardian DDoS-Guard was a global information security service that hosted “thousands of websites”.

Parler critics said it was a potential security risk for it to depend on a Russian company, as well as an odd choice for a site popular with self-described patriots.

Russian propaganda has stoked political divisions in the United States, supporting Trump and amplifying false narratives about election fraud but also protests against police brutality.

Parler, which disclosed it has more than 12 million users, sued Amazon last week after the cloud services provider cut off service, citing poor moderation of calls to violence.

In an update on Monday, linked to a Fox News interview in which Matze said he was “confident” Parler would return at the end of January.

With Reuters

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Facebook claims it does not conduct business in Australia in Cambridge Analytica appeal | Technology




Facebook is claiming it does not conduct business in Australia and does not collect and hold data in the country in its effort to avoid liability over the Cambridge Analytica scandal.

Last year, the privacy commissioner took Facebook to court over an alleged mass privacy breach involving the use of Australians’ Facebook data in a vote-influencing operation involving Cambridge Analytica, a company that assisted the Trump campaign and was then headed by Trump’s key adviser Steve Bannon.

The court action came two years after revelations in the Guardian and Observer that 50m Facebook users worldwide had their names, dates of birth, emails, city locations, friends lists, page likes and – in some cases – messages harvested to build powerful software that could predict and shape voter choices.

The information was gathered through a personality quiz app named “This is your digital life”, which collected the data of those who downloaded the app and their unwitting friends.

Only 53 people in Australia installed the app, according to court documents, but it was able to harvest the data of 311,127 Australians in total.

The Office of the Australian Information Commissioner has accused Facebook of serious and repeated breaches of privacy law by leaving its users exposed to having their data sold and “used for purposes including political profiling, well outside users’ expectations”.

The case was brought against Facebook Inc, based in Delaware, and Facebook Ireland, meaning that the OAIC had to convince a court it had a prima facie case that both offshore companies carried out business in Australia and may have contravened Australia’s privacy laws.

Facebook’s parent company, Facebook Inc, has repeatedly fought the suggestion it does business in Australia, and lost.

As part of its case, it argued that it does not collect or hold data on Australian users in Australia.

That argument was rejected by Justice Thomas Thawley in September, who found Facebook Inc did collect and store information in Australia, through caching servers located here and through the installation and operation of cookies on Australian devices.

Thawley also found the company conducted business in Australia by providing local app developers with what is known as the Graph Application Programming Interface – a piece of software allowing apps to request personal information from Facebook users.

Now, Facebook is seeking to appeal Thawley’s ruling to the full bench of the federal court.

Court documents show it is arguing that “substantial injustice” would be caused if it is not given leave to appeal to the court.

Facebook says the appeal examines “important questions” about how privacy laws define what it means to carry on business in Australia and “collect” or “hold” personal information.

The OAIC did not comment on Facebook’s latest appeal.

But in September, following its success in the federal court, the regulator said:

“While these matters remain to be established at trial, the court held the matters were sufficiently arguable to justify service outside of Australia and subjecting Facebook Inc to proceedings in Australia.”

Facebook was approached for comment.

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GitHub apologizes for firing employee who warned of Capitol attack Nazi link | Technology




GitHub, a technology firm owned by Microsoft, apologized on Sunday for what its COO, Erica Brescia, called “significant errors in judgment” following outrage that it had fired an employee, who is Jewish, for warning that “Nazis” were among the pro-Donald Trump mob who attacked the US Capitol on 6 January.

“In light of these findings, we immediately reversed the decision to separate with the employee and are in communication with his representative,” Brescia wrote in a blogpost. “To the employee, we wish to say publicly: we sincerely apologize.”

According to Insider, which first reported the firing, the tech firm terminated the employee two days after he predicted the insurrection’s potential Nazi links in a company chat room. The message allegedly cautioned “stay safe homies, Nazis are about”.

The firing garnered immediate outcry among staff. In response, GitHub hired an outside firm to investigate. The findings, released on Friday, revealed the procedural errors resulting in the tech company offering the employee his job back, and its head of human resources stepping down on Saturday.

Employees later circulated a letter demanding that the company answer questions about the worker’s termination, while also calling on them to denounce white supremacy.

In Sunday’s blogpost, GitHub noted that the executive acknowledged that “employees are free to express concerns about Nazis, antisemitism, white supremacy or any other form of discrimination or harassment” in an earlier statement shared with employees.

“It was appalling last week to watch a violent mob, including Nazis and white supremacists, attack the US Capitol,” the post noted the company’s CEO, Nat Friedman, had said. “That these hateful ideologies were able to reach the sacred seat of our democratic republic in 2021 is sickening.”

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