13 MILLION SHARES OF ITS OWN IPO
FOR USERS AFTER FILING PAPERWORK
WITH THE SKEGS COMMISSION SECURI
COMMISSION.
JOINING ME NOW IS HARVEY PITT.
THANK YOU VERY MUCH FOR BEING
HERE.
>> GOOD TO BE WITH YOU, MARIA.
MARIA: YES, I WANT TO GET YOUR
TAKE ON SO MANY THINGS.
LET’S TALK ROBINHOOD FOR A
MOMENT AND ALLOWING RETAIL
INVESTORS TO GET IN ON THE IPO.
YOUR REACTION.
>> MY REACTION IS, THIS IS A
CLEVER IDEA.
IT WILL REQUIRE A LOT OF
NEGOTIATIONS BETWEEN ROBINHOOD
AND THOSE WHO CREATE IPOS FOR
OTHER COMPANIES.
IT WILL BE EASY FOR ROBINHOOD TO
DO THIS FOR ITS OWN IPO BECAUSE
IT DOESN’T HAVE TO NEGOTIATE
WITH ANYONE.
BUT IT WILL HAVE TO NEGOTIATE
WITH THOSE ON WALL STREET WHO
ARE HANDLING OTHER IPOS.
BUT I THINK IT’S SIMPLY A
QUESTION OF WORKING OUT
ARRANGEMENTS AND THIS WILL BE A
NOVEL AND INTERESTING APPROACH.
MARIA: YEAH.
I MEAN, I’LL TELL YOU, SO MANY
THINGS HAPPENING IN THE CAPITAL
MARKETS TODAY THAT I’D LOVE YOU
TO COMMENT ON.
FOR EXAMPLE, THIS BOOM IN SPACS.
EARLIER THIS HOUR WE REPORTED
THAT WeWORK IS AGREEING TO A
SPAC DEAL WITH BOEX ACQUISITION
CORP., A $9 BILLION DEAL.
THIS COMING AS THE SECURITIES
AND EXCHANGE COMMISSION IS
INVESTIGATING THE RISE IN
SPECIAL PURPOSE ACQUISITION
COMPANIES, ACCORDING TO REUTERS.
HARVEY, WE’VE SEEN A STRING OF
DEALS WHICH PRETTY MUCH ALLOW
COMPANIES TO GO PUBLIC BY
MERGING IN WITH A SPAC.
WHAT’S YOUR REACTION TO THIS NEW
WAY OF DOING THINGS AND THE RATE
OF GROWTH OF SPACS THAT WE’RE
SEEING?
>> I THINK THAT AS A GENERAL
PROPOSITION, THERE ARE A LOT OF
ADVANTAGES TO IT BUT THERE ARE
ALSO LEGITIMATE CONCERNS ABOUT
THE WELFARE OF THOSE WHO ARE
ENCOURAGED TO INVEST.
AT THE MOMENT, I THINK A LOT OF
PEOPLE ARE HEARING ABOUT SPACS
AND WITHOUT REALLY THINKING
THROUGH THE ISSUES, THEY’RE
FOLLOWING THE HERD, SO SO-TO-SPE
AND INVESTING WITHOUT
UNDERSTANDING EXACTLY WHAT IT IS
THEY’RE BUYING INTO.
IN A SENSE, PART OF IT IS YOU
ARE BUYING INTO A PIG IN A POKE,
IF YOU BUY A SPAC, BECAUSE YOU
DON’T KNOW WHAT THE ULTIMATE
ENTITY WILL BE THAT THE SPAC
WILL ACQUIRE OR WHETHER IT WILL
ACQUIRE ANY ENTITY.
AND THERE ARE OTHER QUESTIONS IN
TERMS OF BOTH DISCLOSURES AND
INSIDER TRADING, SO THE S.E.C. I
THINK IS APPROPRIATELY STEPPING
BACK AND LOOKING AT THIS OF.
RIGHT NOW, ITS INQUIRY IS
INFORMAL WHICH MEANS IT’S ASKING
PEOPLE TO VOLUNTARILY TURN OVER
OF INFORMATION BUT I ALSO
BELIEVE THAT NO ONE SHOULD BE
MISLED, IF THE S.E.C. FINDS
INDICATIONS OF CONCERN TO IT
ABOUT HOW INVESTORS ARE BEING
TREATED, THEY WILL GET SUBPOENA
POWER AND GO AFTER INDIVIDUAL
COMPANIES.
RIGHT NOW, NO SPECIFIC PUBLIC
SPAC IS BEING TARGETED.
MARIA: I SEE.
YEAH, I THINK IT’S A REALLY
INTERESTING POINT THAT YOU MAKE
BECAUSE ALL YOU REALLY KNOW IS
THAT ANY COMPANY IS GOING TO GET
ACQUIRED BY A SPAC.
YOU DON’T NECESSARILY UNDERSTAND
OR IT’S NOT NECESSARILY
TRANSPARENT THAT YOU KNOW WHAT
GROWTH STORY THAT COMPANY MAY
HAVE OR HOW THAT COMPANY’S
FORTUNES MAY OR MAY NOT CHANGE
AND WHAT THE GROWTH STORY IS
RIGHT OFF THE BAT SO THERE’S A
LOT OF INFORMATION TO BE GAINED
FROM THE INVESTOR LOOKING INTO
THESE THINGS.
LET ME TURN TO CHINA, HARVEY.
WE’VE SPOKEN A LOT ABOUT CHINA
ON THIS PROGRAM AND THE MOTIVES
AND THE GOALS OF THE CHINESE
COMMUNIST PARTY, WANTING TO
OVERTAKE THE UNITED STATES AS
THE NUMBER ONE SUPER POWER,
CIVIL MILITARY FUSION AND HOW
SOME CHINESE COMPANIES ARE VERY
TIED TO THE CHINESE MILITARY AND
THAT HAS LED TO THE DELISTING OF
SOME CHINESE COMPANIES, THE
SECURITIES AND EXCHANGE
COMMISSION BEGINNING TO
IMPLEMENT A LAW PASSED THAT
WOULD THREATEN TO KICK CHINESE
COMPANIES OFF OF U.S. EXCHANGES
IF THEY DID NOT FOLLOW THE
AUDITING RULES.
THE S.E.C. SAYS IT’S FORCING
ACCOUNTING FIRMS TO BE ABLE TO
REVIEW FINANCIAL YOU AUDITS OF
COMPANIES BASED OVERSEAS.
YOU WOULD THINK THAT ALL
COMPANIES SHOULD FOLLOW THE SAME
RULES AND IF YOU’RE LISTED IN
THE UNITED STATES, YOU HAVE TO
FOLLOW SARBANES-OXLEY THE WAY
EVERY OTHER COMPANY DOES.
WHAT IS YOUR REACTION TO WHAT’S
GOING ON WITH REGARD TO CHINA
AND CHINESE LISTED COMPANIES?
I RECOGNIZE THIS IS A BIG GROWTH
STORY, CHINA IS, FOR AMERICAN
COMPANIES WHO WANT TO SELL TO
1.4 BILLION PEOPLE BUT ARE THEY
ALSO NOT FOCUSED ON THE RISKS
HERE AND THE TIES TO A COMMUNIST
NATION?
>> WELL, I THINK THERE ARE A LOT
OF DIFFICULTIES HERE, MARCH A
YAY.
ONE OF THE BIGGEST PROBLEMS IS
THAT THE CHINESE GOVERNMENT
TAKES THE POSITION THAT AUDIT
WORK PAPERS ARE CONFIDENTIAL AND
CANNOT BE RELEASED WITHOUT
APPROPRIATE APPROVAL FROM THE
GOVERNMENT.
THE PCAOB WHICH IS THE PRIVATE
SECTOR OVERSEER OF AUDIT WORK
HAS ATTEMPTED TO WORK OUT
ARRANGEMENTS WITH CHINA AND IT
HAS BEEN UNSUCCESSFUL AND THIS
GOES BACK FOR QUITE A PERIOD OF
TIME.
THE HOLD FOREIGN COMPANIES
ACCOUNTABLABILITYACCOUNTABLABILI
THE S.E.C. ADOPTING INTERIM
RULES.
I THINK THE DIFFICULTY IS THAT
WITHOUT A GOVERNMENT TO
GOVERNMENT AGREEMENT, THE WORK
IS GOING TO BASICALLY BE VERY,