Transcript of "Wall_Street_Workshop_for_NPOs_5.24.04.ppt"
more than just a Journal, a movie and a place.
All you ever wanted to know, plus MORE!
A primer for Youth, I.N.C.’s non-profit network
Some Background -
Glass Steagall Act:
“An Act, passed by Congress in 1933, that prohibited commercial
banks from collaborating with full-service brokerage firms or
participating in investment banking activities.”
Changes in the past 5 years
Glass-Steagall Dismantled - 1999
blurs the distinction between commercial banks and brokerage
Generation of senior bankers start their own firms
Infusion of Start-Ups and Specialty Operations
Holding Company Conglomeration
Accounting Regulatory Scandals – Eliot Spitzer
Smith Barney (private wealth management and
equity research unit)
When thinking about
CitiGroup Asset Management
CitiGroup Private Bank and co-chairs, it is
CitiCapital important to remember that
Travelers (Insurance) someone working at
Primerica “Citigroup” can mean
CitiFinancial many many different
Categories of the Financial Industry
Commercial Banking – traditionally a lending function
Investment Banking – advisory/execution
Money Management – asset gatherers/ investors
Venture Capital – start –ups / pre-IPO
Hedge Funds – trading vehicle
Private Equity – funds purchasing blocks/leverage
Deal Flow and Vendor Asks – How
does the $$ flow?
Banks Private Equity A B C
Accounting Law Consulting
Firms Firms Firms
Why is this important to me?
Deal Flow: Understand who is buying services from
whom – which way is the money flowing and how can
your fundraising benefit?
There is currently an abundance of capital to
Important to be able to use this “language”
accurately in appealing to these professionals
Glossary: n. Wall Street
terminology for dummies
Analyst: an employee of a bank, brokerage, advisor or mutual fund who studies companies
and makes buy and sell recommendations, often specializing in a single sector or industry.
Arbitrage: attempting to profit by exploiting price differences of identical or similar financial
instruments, on different markets or in different forms.
Broker: An individual or firm that charges a fee or commission for executing buy and sell
orders submitted by an investor; the role of a firm when it acts as an agent for a customer and
charges the customer a commission for its services.
Chinese Wall: a term used to describe procedures enforced within a securities firm that
separate the firm’s departments to restrict access to non-public, material information, in order
to avoid the illegal use of inside information.
Debt (bonds, bank loans): a liability or obligation in the form of bonds, loan notes, or
mortgages, owed to another person or persons and required to be paid by a specified date
Due Diligence: the process of investigation, preformed by investors, into the details of a
potential investment, such as an examination of operations and management and the
verification of material facts.
Glossary cont.: all of the words I’m supposed
to know but have been too embarrassed to ask for
Equity: ownership interest in a corporation in the form of common stock or preferred stock.
Futures: a standardized, transferable, exchange-traded contract that requires delivery of a
commodity, bond, currency, or stock index, at a specified price, on a specified future date.
Unlike options, futures convey an obligation to buy.
Hedge Fund: An aggressively managed portfolio taking positions on safe and speculative
opportunities. Most hedge funds are limited to a maximum of 100 investors. For the most part,
hedge funds are unregulated because it is assumed the people investing in these are very
sophisticated and wealthy.
Leveraged Buyout (LBO): Takeover of a company or controlling interest in a company, using
a significant amount of borrowed money, usually 70% or more of the total purchase.
Merger: the combining of two or more entities into one, though a purchase acquisition or a
pooling of interests.
Options: the right, but not the obligation to buy (for a call option) or sell (for a put option) a
specific amount of a given stock, commodity, currency, index, or debt, at a specific price (the
strike price) during a specified period of time.
Securities and Exchange Commission (SEC): the primary federal regulatory agency for the
securities industry, whose responsibility is to promote full disclosure, and to protect investors
against fraudulent and manipulative practices in the securities markets.
Strategic Acquisition: an acquisition that is made because of operational benefits that will
result from the two companies working as one, thereby leading to greater profits than the two
would earn separately.
Venture Capital: Money made available for startup firms and small businesses with
exceptional growth potential. Managerial and technical expertise are often provided as well.
The downside for entrepreneurs is that venture capitalists usually receive a say in the major
decisions of the company in addition to a portion of the equity.