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Non-Tech : Datek Brokerage $9.95 a trade -- Ignore unavailable to you. Want to Upgrade?

To: tmsail who wrote (12247)	5/24/1999 7:59:00 PM
From: Paul K	Read Replies (3) \| Respond to of 16892

"Datek gets $300 million in financing and plans to forgo planned IPO" Forgoing an initial-public stock offering, at least for now, Datek Online Holdings Corp. has raised $300 million in private financing, including money from a group run by Microsoft co-founder Paul Allen and France's Group Arnault. Datek, which delayed an IPO last summer because of publicity surrounding regulatory problems, ran into trouble again last week when it agreed to a censure by the U.S. Securities and Exchange Commission for allegedly dipping into customer funds to cover other obligations. The SEC settlement, however, “had no effect at all one way or the other” in Datek's decision to raise money privately instead of publicly, said Datek President Edward J. Nicoll. He added that Datek continues to examine all possible financing options, though he acknowledged that an IPO in the next few months wasn't likely. The recent SEC settlement, to which Datek agreed without admitting or denying wrongdoing, related to alleged book-keeping violations last spring. Mr. Nicoll called the large investment by three different groups, expected to be officially announced Tuesday, “a major vote of confidence by these investors in our business model.” Credit Suisse First Boston Corp., the home of well-known Internet-brokerage analyst Bill Burnham, served as placement agent for the transaction. The investors include Mr. Allen's Vulcan Ventures Inc. of Bellevue, Wash.; Group Arnault, the private holding company of French billionaire Bernard Arnault which controls the luxury conglomerate LVMH Moet Hennessy Louis Vuitton SA; and TA Associates Inc., a private equity investment firm in Boston specializing in technology and financial services. Group Arnault is believed to be investing a little more than half the $300 million. Together, the three investors will take a minority stake in Datek, though exact terms of the deal weren't disclosed. A representative from each of the groups will have a seat on the Datek board, expanding it to nine members from six, Mr. Nicoll said. Datek, the fourth-largest U.S. online broker measured in terms of trades per day, boasted 205,000 customer accounts at the end of the first quarter. It intends to use the $300 million mainly to expand advertising and beef up its technology, according to Mr. Nicoll. Mr. Allen, a major investor in cable and Internet companies, is at the center of the hot movement to combine high-speed Web access over cable lines with Internet programming. Group Arnault, meanwhile, has made a series of Internet and electronic-commerce investments in recent weeks. The Web investments, however, are made independently of LVMH, and are made through Group Arnault and a fund Mr. Arnault has set up specializing in e-commerce. — Thomas Kamm in Paris contributed to this report. Copyright © 1999 Dow Jones & Company, Inc. All Rights Reserved. From... msnbc.com