An A-level son of Alabama, an inexperienced trader who lost

A lot of America is awakening to the fact that its trade relationship with China is not in our interests (Google+ if you missed the weekend blizzard alert). And somehow, I think there’s a…

An A-level son of Alabama, an inexperienced trader who lost

A lot of America is awakening to the fact that its trade relationship with China is not in our interests (Google+ if you missed the weekend blizzard alert). And somehow, I think there’s a good chance that these two beasts will work it out – a deal that will result in the re-opening of internet commerce between the two countries – two countries that are far more diverse in talent and market opportunities than the US is – and which we are grossly invested in neither.

There are those who say that the deal must go through “the legally prescribed channels” – indeed, the SPAC filing was filed late in the afternoon of Saturday, May 19, which is less than 48 hours after Friday, May 18, the 45th Anniversary of the signing of NAFTA. Still, there’s little doubt that it’s not anything from the above that’s setting the president up to have a grand PR moment.

There is also quite a bit of intrigue surrounding what exactly went down with SPACs this time around. The very first new entry on the US Securities and Exchange Commission’s registration list in over 20 years, the huge SPAC kicked off the year with a splashy Sunday, March 4, deal – a $1.5 billion, 70%-plus-holding mega-round of financing, which gave its co-investors control of over a thousand public companies.

The first SPAC was founded by Patrick Pachtman. Pachtman is currently Managing Director of Madrone Capital Management, a $2 billion-plus hedge fund, and he founded the Cayman Islands-based Dalian Asian Fund Management, which manages over $2 billion of investors’ assets. For Pachtman, his launch of SPAC Atlanta Apparel was no hobby. He’s the CEO of the company, which is headquartered in Georgia, and he has managed an operating business for the last 15 years.

According to the SEC’s rules, Pachtman also had to acquire at least 20% of the controlling interest in at least five US-domiciled companies, which meant that, apparently, he had to buy 100 shares of each of the companies – 23.362317 shares, to be exact – as part of the deal.

Considering that the cost of those shares was $40,000 on its launch day, when Pachtman priced the offering, then the remainder of the deal had to run through his account or another investment vehicle managed by his firm. Pachtman posted a SnapChat video announcing his intention to raise $30 million. The video was removed not long after it was posted. Shortly thereafter, he updated his LinkedIn page to reflect a new job and a new hometown – Atlanta, Georgia. (The new job title is managing director.)

Or, as the world of investigative journalism prefers to call it, Stinking $40,000 in Bad Credit.

According to last week’s confirmation filing with the SEC, Pachtman sold a chunk of his 18% stake in the deal (which he now holds elsewhere, outside the US), and that included exchanging out at least one hundred $40,000 worth of stock for eight cash paychecks.

Had Pachtman taken the money and run, the SEC says, it would have violated the rules. Pachtman chose to remain in a job he didn’t want. Moreover, for the purposes of marketing the offering and determining eligibility, Pachtman needed to have control over and knowledge of the 5 companies under direct control. (Pachtman didn’t gain these rights in the SPAC.)

Of course, that money had to come from somewhere, and it had to come from someone with the Cautious Investor’s License. (In fairness, the SEC doesn’t actually assign licenses, it recommends or licenses those who qualify, based on the timing and context of the transaction and the culpability of the violator.)

According to the SEC filing, Pachtman raised $40,000 from a combination of the $20,000 from sales of shares to another person from whom he borrowed the money, and the $20,000 from the 601 stocks purchased by the PE license.

And then, last Monday, June 11, Pachtman met with the IJ for an interview. While confirming his status as CEO of the company, Pachtman mentioned that a job opportunity he had been looking for had come up at Madrone. I jotted down the details of that interview in my notebook.

According to the SEC filings, in the event that the merger agreement is “proposed” and entered into, the 5 internet companies will be the

Leave a Comment