Blockchain and Trust

Blockchain and Trust

Blockchain and Trust: An Inescapable Truth

Financial services professionals must inevitably “[deal] with people,” undoubtedly know their track record of moral failures, and likely cannot help but empathize with Nakamoto’s aim to eradicate the need to trust when transacting with “this kind of creature.” In full view of the risks of fraud and loss plaguing financial systems, Nakamoto promises respite in a new world of logic and objective mathematics, free from the prejudicial and fickle behaviors of man that Carnegie identified.

But is it really possible to eradicate trust from the system? The very whitepaper that claims to have solved the problem of trust in financial services defends its distributed ledger solution with “honest nodes” creating an “honest chain” with “honest” incentives. In fact, the term “honest” appears 16 times in the Satoshi’s 9-page paper. Has he really escaped the necessity of trust in doing business?

And what can financial services professionals take away from this? …

This is Us.

This is Us.

From Dunder Mifflin to Confucius to ClearTrust.

…our own Mission, Vision and Values has had a tall order to fill. They must be true to us, endure the seasons, and set the direction of our work. They must be custom-fit to us, such that they cannot be collectively worn by another company but can only be worn by us. And they must be brief, cutting straight to the point with no extra weight or empty words.

Then one day it nonchalantly came into focus, appearing in my mind as something that had been there all along but never given sufficient attention…

We will treat you the way we want to be treated.

Can it be that simple? Actually, yes. It’s brief enough to remember but sweeping in its implications. It governs how we will engage with one another, our clients, their shareholders, our competitors and all our stakeholders. It is a compass to navigate difficult waters. It is empowering and dignifying, aspirational yet accessible….

Capitalism Underground in Cuba

Capitalism Underground in Cuba

Cleartrust founder, Kara, reflects on glimpses of capitalism caught during a recent trip to communist Cuba.

Forty-five short minutes and our plane touches down in a world ostensibly trapped in time: La Havana. But this isn't the final destination for the team I am leading on a humanitarian trip. A six-hour layover stretches before us as we wait for our next flight. The airport of this nation's capital has a humble café serving beverages in a hot, humid waiting room…

These black market enterprises are everywhere, hidden in plain sight and just beyond the detection of the informants stationed on every block of every town by the Department of the Defense of the Revolution. For the consumers, these small entrepreneurial ventures keep families fed when shelves are empty and children clothed when prices are too high, offering an affordable alternative to state-run stores. For the merchant, these ventures offer a lifeline of hope that one day enough money can be saved to afford better nutrition, a car or even a home.

It seems humans have an indomitable spirit to create, to grow, to move forward. The entrepreneurial spirit that conceived Capitalism can be oppressed but it cannot, as the Cuban people prove, be crushed….

Irrevocable Transfer Agent Instruction Letters: Critical Questions

Irrevocable Transfer Agent Instruction Letters: Critical Questions

Critical questions issuers should ask before agreeing to a convertible promissory note and irrevocable transfer agent letter.

Short on funding options from more traditional sources, many microcaps resort to convertible notes. In such transactions, the noteholder offers desperately needed capital in exchange for a Convertible Promissory Note. Accepting the funds, the issuer satisfies its immediate cash flow demands and survives to fight another day. But then it comes time to pay the piper.

Typically, once the note has “aged” in accordance with Rule 144, the debt can be converted into common stock at a steep discount and immediately sold in the marketplace (assuming all requirements of a Rule 144 resale has been met). The aggressive sale generally causes the stock price of the thinly traded microcap to drop, and each subsequent conversion request is computed at a lower stock price resulting in the issuance of more and more shares.

The stock price plummets, the float explodes, and the debt becomes harder and harder to pay off. It is the ultimate Death Spiral. It harms real investors. And yet, it is the only way some microcaps can obtain critical funding.

Some noteholders take advantage of a struggling issuer’s need for immediate funding….

Peace in the Storm: Reflections on Disaster Recovery

Peace in the Storm: Reflections on Disaster Recovery

Reflections on Disaster Recovery and Hurricane Irma written in September 2017.

First and foremost, we all must have a disaster recovery and business continuity plan. I might skip this statement as too obvious to bother writing, except the surreal reality is, not all agents are prepared. We intercepted a call, two days before Irma was to hit, from a Florida-based transfer agent without a plan. News of mandatory evacuations in your town is not the time to start thinking about this. If you do not have a disaster recovery plan, you must create it now.

Theoretically, a disaster recovery plan should contemplate all possible problems and prevent those problems from disrupting the business. But the truth is every disaster is defined as such because of the tremendous number of factors and outcomes that we can’t predict, control or prevent, and no particular list of tips on disaster recovery will ever be sufficient to encompass all that requires our attention. What’s more, there are as many disaster recovery plans as there are businesses in the world. No one-size-fits all solution will ever exist. The “unknowns” and “uncontrollables” far outweigh the “best practices.” Hence the potential for ulcer-inducing stress when a disaster actually strikes. But I’ve found a singular mantra of wisdom applies universally to all companies that can bring peace as we embrace uncertainty: communicate, clarify, practice, and know your limits.

This is the most of what we can do as business leaders. We must be proactive to…

Leveraging Legends to Enforce Investor Lockups

Leveraging Legends to Enforce Investor Lockups

How one simple step can protect your stock and save you thousands in legal fees.

Issuers of securities will sometimes require an investor to agree to a “lock up” or “leak out” provision that restricts or limits the public resale of shares for a certain period of time. This is very common among insiders and control persons, but can also be required of a non-affiliate investor. These special  restrictions serve many functions, chief among which is to prevent downward pressure on the stock caused by large shareholders attempting to sell their holdings at once, or to stabilize the stock price after an IPO or large liquidation event.

However, a signed lock-up agreement might not be enough. If the legend is not clearly printed on the share certificate or share statement, it might not be enforceable.

While issuers have long assumed that a signed lock-up agreement is sufficient to prove the current investor has actual knowledge of a restriction, this is still not enough to ensure a lock-up will be enforced. A key reason is that brokers and clearing firms will ultimately….

A Space that Speaks

A Space that Speaks

ClearTrust has moved! 

The importance and prominence of a disciplined work ethic is so deeply ingrained in this culture that it is expected families will employ at least one helper to care for family and home while both parents work full time jobs. A strong work force is critical to sustain this small-but-mighty country’s economy, and every worker matters. The life of a Singaporean is to be educated well, and then to work.

My Singaporean friend recently lamented to me, “I honestly don’t think work can be fulfilling.”

This is a deeply saddening statement when one considers how central and consuming work is to Singaporean life...