Partnership for Freedom– Rethinking Supply Chains Challenge Grant Awarding $500,000 to Entrepreneurs

I am excited to join in announcing the launch of Rethink Supply Chains: The Tech Challenge to Fight Labor Trafficking from the Partnership for Freedom, for which I will be serving as one of the judges.

The Rethink Supply Chains Challenge is a call to action to a wide range of communities – developers, designers, social entrepreneurs, advocates, and innovators – to apply their talents to a critical cause: ending forced labor and modern slavery in the global supply chain.

In today’s global economy, forced labor remains a critical problem across a range of industries, including manufacturing, fishing, agriculture, and mining. Due to the complex nature of supply chains for goods and services, however, it’s often difficult for businesses, workers, NGOs, and governments to understand where forced labor is occurring and how to take action to remedy it.

In response to this problem, the Challenge is seeking creative tech tools and solutions that target key problems in how we prevent, identify, and address forced labor. From finding new ways for companies to connect directly with workers to improving the traceability of products in high-risk supply chains, the Challenge seeks innovative approaches that leverage technology to provide better results. It will be supporting the best of the ideas through a $500,000 prize pool for finalists and winners.

The first round of the challenge is open until December 13th. I hope you’ll visit the Partnership for Freedom website and spread the word.


Drinking Kosher vs. Non-Kosher Wine in Israel: Soon to be an Irrelevant Topic

Traditionally, kosher wine has been dismissed by wine connoisseurs as excessively sweet, unappetizing, and certainly only called for as part of the ritual observance of Jewish holidays. For me, Manischewitz wines define this category.  Whereas kosher hot dogs are viewed by many consumers as better than regular hot dogs (Hebrew National comes to mind), and kosher salt somehow evokes something special that makes some consumers believe it is better than non-kosher salt, kosher wine is viewed as inferior to non-kosher wine. This is because mass-produced, inexpensive kosher wine is boiled through the pasteurization process to be made kosher. Boiling wine is not a good thing.

However, pasteurization is not necessary for a wine to be kosher. To be kosher, specific rules, including rabbinical supervision, must be observed with respect to how the wine is handled from the moment that the juice is expressed from the berry to the moment it is bottled.  As long as the winemaker is skilled at wine making and the grapes are of high quality, these ritual observances need not have any negative impact on the quality of the wine produced.  You can still make a bad kosher wine, but you can also make an extraordinary wine in Israel that happens to be kosher.  For more on the rituals associated with making kosher wine, click here.

Based on my recent wine tasting experience in Israel, I am now convinced that the kosher element can be a footnote to the wine, not its defining feature, whereas the positive differentiation with the wine can be that it is of Israeli origin.

Kosher wines that are made kosher without pasteurization are called non-mevushal. In my view, mevushal wines are on their way to oblivion.

We drank both kosher and non-kosher Israeli wines on our trip. I believe that no more than 10 years from now, Israeli wines will be considered competitive with other global wine regions of excellence entirely on their merit as wines, with the kosher label being a footnote to non-Jews who appreciate fine wines and a welcome fact for Jews who observe kashrut.



Israeli Red Wines: Some Vintners are Releasing Promising Wines Too Early

We tasted too many 2012’s and 2013’s that our group felt were prematurely available for retail purchase— not because they are not excellent wines, but because they need an additional 12-18 months of bottle aging before reaching the consumer. Selling wines too soon, when they are not approachable, can leave you with too much tannin on the finish, closed or muted fruit aromas, and an overall flatness on the palate that hides the complexity of what can evolve to be a great wine in another year.  Professionals, who have the benefit of knowing the full spectrum of how a wine tastes at various stages of its maturity, can evaluate a wine’s promise when it is in the barrel years before its release.  For regular consumers, especially in a nascent domestic wine appreciation culture such as Israel, the result of offering a wine to the public too early may be poor customer experience.

Moving into the red zone, one of the more colorful winemakers we met is Shuki Yashuv of Agur, a boutique winery producing about 10,000 bottles a year. Shuki learned how to make wine from the founder of Tzora winery, Ronnie James, and he holds strong opinions about everything. While his approach is representative of the Israeli New Wave, he could be the father of several of the other leading edge winemakers.

Agur is hard to find but hard to forget once you’ve found it. The 2011 Agur Special Reserve, aged in French barrels (50% new oak) for 18 months, is a blend of 40% Cabernet Sauvignon, 30% Merlot, and 24% Cabernet Franc. This wine is black velvet, with wonderful fruit on the palate, and a tobacco finish. The 2013 Agur Layam Syrah blends 50% Syrah with 50% Mourvédre, with each varietal aged separately in second year barrels until blending at the time of bottling. The oldest vines used for this wine are 19 years old.


Shuki Yashuv with Inbal Baum of Delicious Israel

The terroir from these Israeli wines brings black olive, tobacco, and spice box into your palate—the Bordeaux blends, like the 2012 Agur Kessem (40 percent cabernet, 30% merlot, 25 percent cabernet franc, 5% petit verdot), don’t even try to emulate Bordeaux- they stand apart as distinctively Israeli.

We then visited Tzora in the Judean Hills for a delicious lunch and a tasting of some of their finest wines. Eran Pick, winemaker and our gracious host, has a UC Davis/California Bachelors in Oenology and Viticulture and is among a prestigious group of Israeli winemakers with UC Davis credentials including Israel Flam (former chief winemaker at Carmel), Gil Shatsberg of Recanati, Lewis Pasco (formerly of Tishbi & Recanati and now the Lewis Pasco Project) and Dr. Yair Margalit. He works closely with Jean-Claude Berrouet (Pétrus, Dominus). We expect to be hearing in the near future that Eran has joined the exalted and rarefied Masters of Wine (MW).

We were also fortunate to have wine maker Ari Erle and well-known foodie Inbal Baum of Delicious Israel as our guides during different parts of our journey. Ari is a UC Davis trained Napa Valley veteran (former assistant winemaker at O’Shaughnessy and Elizabeth Spencer) who is emblematic of the leading edge of wine making in Israel. He is the general manager and winemaker for Bat Shlomo vineyards. Founded in 2010, Bat Shlomo winery is located in a village that was established in 1889 as a daughter-settlement of Zichron Ya’akov, funded by Baron Edmund James de Rothschild, and was named after Betty Salomon , the daughter of Salomon Mayer von Rothschild (the Baron’s uncle and grandfather). Bat Shlomo is undergoing a complete renovation and wine program expansion under Ari’s guidance. Among other projects, Ari is also working with Napa Valley’s Jeff Morgan of Covenant wines to make Jeff’s first Israeli wine, kosher, of course.

We concluded our journey to Israel with a stay in Tel Aviv, whose highlight was a spectacular dinner at what may be the best restaurant in the country, Catit. Chef Meir Adoni spoiled us with an extraordinary menu rivaling Thomas Keller’s French Laundry.  Before dinner we enjoyed a walking  tour of Jaffa and the open air market in Tel Aviv, sampling amazing street foods with Inbal Baum.  This was truly a memorable trip that Yitz Applbaum and I were delighted to host for the benefit of the charities supported by the Napa Valley Vintners.

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Israeli White Wines of Note: Sphera and Jezreel

Winemaker Doron Rav Hon of Sphera White Concepts has pioneered an Israeli winery that makes only white wine—the portfolio includes Chardonnay, Sauvignon Blanc, the First Page blend, and the White Signature blend. Doron believes in minimal intervention with the grape in making the wine, from the moment that the juice is expressed from the berries, its cold fermentation process in steel tanks, to the bottling. Most of his wines are un-oaked, fermented in steel tanks for 7-8 months, and bottle aged until release. The result is a smooth, refreshing, low alcohol (12.5%-13.0%) low PH (approximately 3.5)  feast for your palate. Paired with artisan cheeses, I believe this wine will confound experts in blind tastings. The 2014 Sphera White Concepts chardonnay, to be released in May, is redolent of watermelon and has mineral notes that I can’t wait to taste against several White Burgundies. At 95 shekels retail, (about US $25) with only 4,500 bottles produced, Sphera is entering the market with a splash!



Doron Rav Hon hosts a tasting…










Another extraordinary white that we tasted is the 2014 Jezreel Levanim Gewurtzraminer Blend—imagine a blend of Gewurtzraminer, Chardonnay, and Colombard—have you ever had that anywhere else or even heard of such a blend?



What Defines the “New Wave” of Israeli Winemakers?

A key thing to keep in mind is that the New Wave of Israeli wine really is new, with some of the more interesting wineries no more than five years old. Many of them currently have no estate fruit, though they are developing estate vineyards. While these new vineyards mature, wineries buy grapes from selected established vineyards. Visiting the wineries, it is easy to sum up several of the crushing, fermenting, and bottling operations as Garagistes who are going to the next level. The results of their early efforts, however, are surprisingly outstanding!

We tasted a wide range of wines on the trip, from both newer and well-established wineries, ranging from Benhaim, Dalton, Pelter, Teperberg, Clos de Gat, Montefiore, Galil Mountain Winery, Golan Heights Yarden, Sphera White Concepts, Agur, Tzora Vineyards, Jezreel Valley Winery, Bat Shlomo Vineyards, Flam, Yatir, Amphorae, and Lewinsohn. Among these the Sphera, Tzora, Agur, Bat Shlomo, Lewinsohn, and Jezreel wineries were exceptional.

One of the distinctive elements that characterizes the New Wave of Israeli wine making is that the younger up-and-comers have chosen to innovate through the blending of varietals that emphasize the craftsmanship of their wine making and show off the terroir of their appellations. What does that mean? Have you ever tasted a white wine that is a blend of 60% Pinot Gris, 30% Semillon, and 10% Riesling (2013 Sphera White Concepts First Page)? How about a red wine that is a fusion of Carignan, Syrah, and Argaman (2013 Adumim from Jezreel Valley Winery); or the 2014 Levanim from Jezreel, which is composed of a blend of Chardonnay, Colombard, and Gewurtzraminer?

These wines are excellent!



From Napa to Jerusalem: Levensohn Vineyards Goes to Israel

I recently returned from an extraordinary trip to Israel with the four winners of the Levensohn Vineyards Auction Napa Valley 2014 live auction lot. Joined by my friend and Israeli wine collector Yitz Applbaum, we co-hosted the first ever Napa Valley Vintners tour of Israel’s wine country. Our group visited important religious and archaeological sites in Jerusalem and Galilee that are not generally open to the public and met with some of the driving forces who are at the leading edge of the Israeli food and wine culture. While I have been to Israel many times, our four guests, who are not Jewish, had never visited Israel before.

In the Galilee, guided by Norma Franklin, PhD, from the Zinman Institute of Archaeology at the University of Haifa, we visited an active archaeological dig at the site of a winery estimated to be close to 3,000 years old. The winery overlooks a site that can be traced to the Biblical story of the treacherous Jezebel and her scheme to appropriate Naboth’s vineyard, as told in the Book of Deuteronomy.


Naboth’s Vineyard winery?

Fast forwarding to 2015, we all were positively surprised by the high quality of the wines that we tasted and greatly enjoyed meeting the New Wave of Israeli winemakers, professionals who have trained in centers of wine making excellence including Napa, Burgundy, and Bordeaux. Many hold oenology degrees from UC Davis.

Most importantly, we developed a sense of the distinctive terroir of the three different wine regions of Israel that we focused on—the Golan Heights, the Judean Hills, and the Jezreel Valley in Galilee.  More on the wines we tasted in the posts that follow….

Governance Models That Don’t Scale: The World According to Charles T. Munger and Jean Jacques Rousseau

JJRMungerCan you name five benign dictators who have ruled successfully for any meaningful period of time (non-fiction)? Can you name five successful, long serving CEO’s (excluding Warren Buffett) whose governance histories are free of the “high-beta” associated with outliers such as Larry Ellison and Steve Jobs?

It’s not easy. Why? Because enlightened dictators and their corporate CEO equivalents are very, very rare; maintaining immunity to the intoxicating effects of power challenges basic human nature.

It is in this context that I found “Corporate Governance According to Charles T. Munger”, a brief article from the Stanford Closer Look Series, thought provoking if not practical. The article was written by David Larker, Director of the Corporate Governance Research Program at the Stanford Graduate School of business, and Brian Tayan, a researcher with Stanford’s Corporate Governance Research Program.

The authors summarize and explain Berkshire Hathaway Vice Chairman Charles T. Munger’s unorthodox view of a model for corporate governance.    According to the article, Munger believes that corporations and their boards should empower their CEO’s more, not less. Munger’s effective CEO, modeled, of course, on Warren Buffet, should be unencumbered by rigid process and freed of unnecessary, excessive checks and balances. Why? So that the CEO can lead effectively. How? In Munger’s construct, CEO’s police themselves, holding themselves accountable to their loosely overseeing directors by binding themselves to a trust based system. And corporate directors should reward these CEO’s for creating shareholder value, while deliberately underpaying them in terms of their annual salary-based cash compensation. According to Munger, and as quoted in the article:

“Good character is very efficient. If you can trust people, your system can be way simpler. There’s enormous efficiency in good character and dis-efficiency in bad character … We want very good leaders who have a lot of power, and we want to delegate a lot of power to those leaders…The highest form that civilization can reach is a seamless web of deserved trust—not much procedure, just totally reliable people correctly trusting one another.”

I agree with Mr. Munger completely, while asking the same questions raised by the authors at the end of this article:

“The trust-based systems that Munger refers to tend to be founder-led organizations. How much of their success is attributed to the managerial and leadership ability of the founder, and how much to the culture that he or she has created? Can these be separated? How can such a company ensure that the culture will continue after the founder’s eventual succession?”

Unfortunately, and founders notwithstanding, the collective global capitalist experience since private property rights were invented and enforced has shown that there aren’t enough of those people on this planet.

kozlowskimug1For a specific cautionary example, I am reminded of Tyco International and its former CEO, Dennis Kozlowski. Kozlowski was recently paroled, almost twelve years after his indictment, ultimate conviction, and after serving over eight years in Attica, for a $134 million corporate fraud (this amount represents a small fraction of the losses suffered by public shareholders). The disgraced former directors of Tyco International (vintage 1999), seemingly highly trustworthy and accomplished men and women, also come to mind. This group, along with the enterprise builders at Enron, Worldcom, and Adelphia, to name just a few, are at the top of my list of examples of poor corporate stewardship and help explain why Mr. Munger’s model for corporate governance is still-born.

But I did say the article was thought provoking, as Charles Munger’s corporate governance philosophy, in my view, evokes Jean Jacques Rousseau’s concept of the Lawgiver.  Author Alex Scott summarizes Rousseau’s core thesis from the Social contract succinctly in this excerpt from his book, The Conditions of Knowledge: Reviews of 100 Great Works of Philosophy :

“The general will always desires the common good, says Rousseau, but it may not always choose correctly between what is advantageous or disadvantageous for promoting social harmony and cooperation, because it may be influenced by particular groups of individuals who are concerned with promoting their own private interests. Thus, the general will may need to be guided by the judgment of an individual who is concerned only with the public interest and who can explain to the body politic how to promote justice and equal citizenship. This individual is the “lawgiver” (le législateur). The lawgiver is guided by sublime reason and by a concern for the common good, and he is an individual whose enlightened judgment can determine the principles of justice and utility which are best suited to society.”

I agree! Let’s find that individual and give him (or her) the keys to the public policy car! Munger’s corporate lawgiver, the enlightened CEO, is also an admirable model worth aspiring to emulate.

As with Rousseau’s 1762 treatise, history has sadly shown us that we lack sufficient incorruptible raw material across the entire history of mankind to render the “lawgiver” experiment successfully scalable, be it in public government or corporate governance.

The unbridled exercise of power is the ultimate intoxicant, and very few humans can responsibly limit the flow of that drug, especially not when they have are given the opportunity to administer it to themselves.



Early 2014 Harvest for Napa Valley—Hard Data Provides Perspective on the Impact of Global Warming

As we walked through the Levensohn Vineyard last week with our viticulturist, Zach Berkowitz, and our vineyard manager, Stan Zervas, of Silverado Farming, Zach cut into a green berry from one of our vines. He explained that we are now 50% of the way through the growing season for the 2014 vintage because the seeds in the grapes are now turning crunchy and hardening.Grapes Levensohn 6 22 14

We expect harvest to occur three weeks earlier than our 2013 crop, which was picked on October 3. Since we replanted the vineyard in 2000, this may be the earliest Levensohn harvest yet (our latest was just before Halloween in 2005).  A key factor impacting the rate of grape maturity is the air temperature during the growing season. In the wine industry, the number of Growing Degree Days (GDD) measures this.

According to Washington State University, “The progression of in-season grapevine development is strongly influenced by air temperature. As such, average heat accumulation is often used to compare regions and vine growing condition. This average heat accumulation is often refereed to as Growing Degree Days (GDD). The summation of daily GDD units can be used for a variety of things: comparing one region to another, comparing one season to another, and predicting important stages in vine development (bloom, veraison, and maturity). … GDD are calculated by subtracting 50 from the average daily temperature (°F). If the resulting value is less than 0, then it is set to 0. Thus, daily GDD units are always positive.”

Silverado Farming recently published the following report on GDD for 2014:

Clusters in early season varieties are starting to grow tight. This continues to be an early season, as bloom and fruit development are earlier than usual. Growing degree days are still a little behind last year, but we are catching up. A month ago, 2013 had the most GDD over the last 21 years. Today, 1997 is the leader. The coolest season was 2003, but now 1998 takes that category. We are at 972 GDD, which is 17 GDD, or about one day, behind 2013.

We are eight days ahead of the average, meaning 972 GDD was achieved 21 June in the average year. Finally, 2014 is has the fourth highest GDD accumulation, trailing only 2013, 1997, and 1996. The chart below shows accumulated GDD for four key years since 1994. These include this year, the year with the most accumulated GDD (1997), the year with the least accumulated GDD (1998), and the 21-year average. 2014 is clearly warmer than the average, but about six days behind 1997. The NWS Climate Prediction Center continues to show high probability for a hotter than normal summer, so above average GDD may well continue this season.

It’s possible, but unlikely in my view, that 2014 may have lower GDD than 2013. But we also have to consider the exceptionally mild winter we had and the unprecedented severity of the California drought in any assessment of how things are changing in the Napa Valley for grape growers and winemakers.We do expect an excellent harvest again this year, with high fruit quality for cabernet sauvignon. All signs are encouraging at this mid-point in the growing season. But it would not be surprising to see 2014 overtake 2013 as having the most GDD since 1994 and continuing the trend of well above average GDD. We don’t see this trend reversing.




Father’s Day Special: Reflections on Baby Clothes

3 D Baby clothesFathers Day 2I am blessed with three wonderful children. The oldest two are now over twenty, and my youngest is 7 months old. As an older father, I’ve experienced a sense of déja vu and even surprise when I can do something really well on the first attempt, such as swaddling or changing a diaper, even though I had totally forgotten that I knew how to do it.

But one thing I still absolutely can’t understand, twenty years later, is baby fashion. Seriously, who makes all these ugly baby clothes?

Fathers Day1My wife sent me clothes shopping the other day, and it was a tough mission.

In my view, most baby clothes are plain ugly. They feature staggering color combinations that make disco lights look dull. From baby-shirts to pants, blouses to bibs, everything is plastered with weird looking creatures. A dreadful pink bear with a scary smile, an oversized violet dog with a square snout and brown stripes, a red elephant with blue polka dots and a yellow palm tree. How would YOU like to wear this to anything other than a Halloween party?

It gets worse when it comes to gender management. Store shelves, and most salespeople, dictate two iron rules for infants: 1: Girls are condemned to wear pink in all its forms and variations: light pink, dark pink, pink with pink dots, pink with light pink stripes, pink with pink animals and lots of pink bows. And if you have a boy, of course, there is the inevitable, inescapable blue. Blue pants with dark blue ladders, blue with blue little cars, light blue shirts with very light blue hippos…


Fathers Day 4

My daughter has piercing blue eyes, and we love to dress her in matching blue (if we can find anything without a printed tractor, a car, or a sailboat, which is tough). Of course, every person we meet in the street or in the park admires our “cute little boy”.

And I can’t understand baby clothes sizes! In the US, baby clothes are indicated with “NB – 3 months”, “3-6 months”, or “12-18 months” etc. This sizing can only make sense to people who don’t have children. I wonder who came up with this bizarre matrix that ignores the fact there are small babies, big babies, thin babies, and plump babies – and all of them may be of the same age.

My daughter fits nicely into baby suits for 18-month olds, a sleeping bag for newborns, and pants for 4 month old babies — all at the same time. I don’t know what to buy! Do I have to bring my baby into the shop to try everything out? Adult clothes aren’t sized by age… Why can’t we have real baby sizes?

Let’s address the actual design of those clothes and their functionality. In my view, three things are essential to a great design for babywear:

(1) It must be easy to put on (even for Dads) without hearing squeals of discontent from your little one;
(2) It must be easy to remove (especially for Dads), and especially under the following use case: baby just spat up a small sea of milk on you, herself, and innocent bystanders; and
(3) It must be easy to open on the bottom in order to change diapers whenever and wherever that task must occur.

Sounds straightforward, right? Nope…  Small sweaters with tiny openings for her head, requiring an experienced pair of hands to pull through her unwilling, wiggling baby head; Tiny buttons that need to be opened and closed each time you attempt to dress your child (do that when she is crying, hungry, or with a colic, and you will understand what I mean). And there are those heavily adorned suits with cool pockets, zippers, and other bells and whistles, but no buttons on the bottom. Which means you have to take off the entire suit just to change a diaper.

Fathers day 6And there’s plenty of fancy, tight pants with an even tighter waistband that don’t allow for important things like breathing, and that’s without a diaper (did I mention these tights pants are for a baby?).
The 2-piece outfits with a bright-colored shirt and matching pants crown my “pointless” list. Babies move constantly, and the shirt always gets pulled up around their neck, leaving them with bare bellies – unless you also dress them in a body suit. But if your baby isn’t eating yet with a fork and knife, and if your baby has a habit of spitting up, you will spend most of your day with her on the changing table.

And those “cute” little nightgowns and dresses that her flying legs kick up and over her waist as soon as you put them on, they leave three-thirds of her body naked.

I ask again, who designs this ugly and impractical baby clothes? We didn’t have the Web when I first became a father. I am hopeful that help is on the way! I can’t wait until I can have my own 3D printer to design and print my own baby clothes at home, maybe a designer will see that there is a bigger 3-D clothing market for babies than for Victoria’s Secret models.



What’s Wrong With This Picture? Precipitous Decline in US Share of Global Equity Listings Continues Unabated

David Weild and Ed Kim originally exposed and reported extensively on the long-term decline in U.S. equity capital market share of public listings relative to other emerging and developed global markets.  Sadly, this graphic update confirms that the trend has gotten worse.  The implications for American innovation are negative.  New capital formation and new public equity listings are critical for economic growth.  New public equity listings provide  strong components of the lifeblood that nourishes economic growth at multiple levels.   Clearly, the root causes behind this trend have not been addressed in the financial and regulatory reforms implemented since A Wake Up Call for America was first published in 2009.

US Listings Decline


The 2009 Grant Thornton report proved without a doubt that the U.S. capital markets for listed equities have been in systemic decline since 1997.  This condition is clearly not the result of the technology bubble or Sarbanes Oxley. Most importantly, the absence of U.S. IPOs negatively impacts American entrepreneurs most of all, regardless of whether they have venture capital or private equity backing.

As of 2012, things have not changed much.  For an updated historical perspective on US IPO’s see the chart below:US-IPO-Activity-2002-2012 (1)

In 2012, of the 128 IPO’s completed in the US, the median deal size of $124 million marked a drop of 2% from 2011.  Excluding Facebook, total proceeds from US IPO’s declined by 27% in 2012 from 2011.  According to the Renaissance Capital report ,all the ten top performing companies’ stock prices and the worst performing companies’ stock prices were from IPO deal sizes exceed $50 million.  This data confirms the continuing absence of IPO’s whose proceeds are below $50 million—and this fact remains a major problem for promising US startups. Our country will continue to suffer the consequences of this trend as long as positive economics for supporting small cap companies in the market are absent.

What can we do about it? One possible solution to this trend would be to establish an issuer and investor opt-in capital market that would make use of full SEC oversight and disclosure, and could be run as a separate segment of NYSE or NASDAQ, or as a new market entrant.  It would offer:

  • Opt-in/Freedom of Choice – Issuers would have the freedom to choose whether to list in the alternative marketplace or in the traditional marketplace.
  • Public – Unlike the 144A market, this market would be open to all investors.
  • Regulated – The market would be subject to the same SEC corporate disclosure, oversight and enforcement as existing markets.
  • Quote driven – The market would be a telephone market supported by market makers or specialists, much like the markets of a decade ago.
  • Minimum quote increments (spreads) at 10 cents and 20 cents and minimum commissions – 10-cent increments for stocks under $5.00 per share, and 20 cents for stocks $5.00 per share and greater, as opposed to today’s penny spread market.  These measures would bring sales support back to stocks and provide economics to support equity research independent of investment banking.
  • Broker intermediated – Investors could not execute direct electronic trades in this market; buying stock would require a call or electronic indication to a brokerage firm, thereby discouraging day-traders from this market.

Research requirement – Firms making markets in these securities would be required to provide equity research coverage that meets minimum standards.

This idea has been presented to our legislators before but has not gotten any traction.  In my view, these new statistics reinforce the need to take another look at constructive, market-based solutions to a severe problem that continues to stifle US economic growth.