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	==Acquisition of Vensure Employer Services, Inc.==		==Acquisition of Vensure Employer Services, Inc.==

Revision as of 16:13, 22 February 2014

Fund.com

Subsidiaries	AdvisorShares
Website	www.fund.com

Fund.com Inc. (OTC Pink: FNDM) is a publicly traded Internet company operating in the financial services, product development, licensing and publishing sectors, based in New York City, New York. The company serves the needs of financial institutions, investors and the general consumer seeking information regarding investment fund options, including hedge funds, mutual funds, exchange-traded fund (ETFs), index funds, etc. Fund.com considers itself the sole company comprehensively focusing on the fund market for all potential investors.

Company Structure and Management

Currently Fund.com does not have any executive team responsible for operational activities of the firm.

Exchange Traded Funds (ETFs)

Exchange traded funds are the most significant product development since money market funds in the 1970s with ETF asset growth approaching $800 billion.

According to Barclays Global Investors, “Just about the only product to see net inflows in 2008 were Exchange Traded Funds."

On a global basis: ETF net sales were US$ 187.5 billion; while net sales of mutual funds were minus US$256.7 billion

In contrast, Hedge Funds for the first time in their 18-year history had significant outflows according to Hedge Fund Research (HFR).

TrimTabs Investment Research expects the outflows to be more than US$ 100 billion for all of 2008.

According to the National Stock Exchange, ETFs represent $1.3 trillion in trading volume per month.

Exchange-traded funds now represent 31 percent of all trading volume in the U.S. equities market, an indication of just how widespread the adoption of ETFs has become in the U.S.

AdvisorShares

Background

Fund.com purchased its 60% stake in AdvisorShares for an initial payment of $275,000, on October 31, 2008 .

Three former Rydex employees, Noah Hamman, Jacob Griffith and Joseph Barrato founded Arrow Funds in February 2006. Less than 7 months after starting Arrow, in August 2006 Noah Hamman, while still acting as the CEO of Arrow Funds, established a separate company called AdvisorShares, allegedly without the knowledge of his two partners "and in violation to his fiduciary duty to Arrow Hamman then systematically diverted to the benefit of himself and AdvisorShares opportunities, assets, and contracts that rightfully belonged to Arrow. When Arrow began to learn of Hamman's competing activities and confronted him regarding those activities, Hamman engaged in further deceptive misconduct by affirmatively misrepresenting the nature and scope of his endeavors on behalf of AdvisorShares". Hamman's employment with Arrow was finally terminated on November 29, 2007, after Arrow Management Committee discovered more information about the nature of Hamman's competing activities.

Application for Exemptive Relief

On November 7, 2008 Arrow commenced arbitration proceedings against Hamman and AdvisorShares for usurping Arrow's intellectual property including its business plan in establishing AdvisorShares. Asked when he expected to get SEC approval, Hamman told IndexUniverse, on November 11, 2008 "I do believe we're within a week or two of getting it, based on the feedback we're receiving from the SEC." In January 2009, Arrow Funds requested a hearing with the SEC to challenge AdvisorShares' application for exemptive relief filed the previous month. Arrow and their counsel claimed that Hamman "To enable the Application to proceed, deliberately thwarted and delayed the selection of the Arbitration tribunal members." This request to block the application for exemptive relief was denied on July 20, 2009. "On March 1, 2010, Mr. Hamman, Arrow and the Members agreed to settle the Arbitration"

Unsuccessful Petition for Dissolution of Arrow

On October 10, 2008, Noah Hamman petitioned (under §18-802 of the Deleware LLC Act) a Court in Delaware to dissolve Arrow Investment Advisors, LLC. He claimed that Arrow's managers had mismanaged the company and could not achieve the goals set forth in the original business plan. He alleged that Arrow's managers had: 1) "exposed the Company to liability by violating the particular federal securities laws and regulations under which the Company is required to operate, and have failed to seek appropriate supervision from the broker-dealer for the Company’s specific obligations as a FINRA-licensed representative" 2) "operated the Company for their own financial benefit, and have spent Company funds for their own private use and enjoyment, while paying wages to various employees in an erratic and tardy fashion." 3)"failed to provide to all members an annual operating plan for 2008 as required by the LLC Agreement". On April 23, 2009, the judge in the case dismissed the Petition with prejudice (meaning that because of misconduct on the part of the claimant it can not be refiled), as Hamman failed to provide factual evidence to back his claims and "Hamman was required to press his fiduciary claims in binding arbitration under the Arrow LLC Agreement". "Hamman suggests that merely stating these allegations, virtually without any factual support, is enough to survive a motion to dismiss. Here, the Petition is devoid of any facts supporting Hamman’s first two allegations, such as which of the myriad federal securities laws Arrow must comply with were violated or for what improper personal purposes Barrato and Griffith used Arrow funds and approximately when and how much of Arrow’s funds they misused." The judge seems to suggest revenge as a possible motivation for filing the suit: "And, although Hamman might be disappointed that he has been ousted from the management of a company he helped establish,"

The DENT Tactical ETF (NYSE: DENT)

An example of AdvisorShares’s growth and business model is the Dent Tactical ETF which commenced trading on the New York Stock Exchange on September 15, 2009 under the NYSE Ticker: DENT. This is the first product of AdvisorShares Investments, LLC, an investment management company that was formed for the purpose of offering a series of actively managed ETFs. DENT is actively managed by HS Dent Investment Management, LLC, an independent economic research and forecasting company and publisher of The Dent Method. HS Dent Investment Management is managed by New York Times best selling financial author, Harry S. Dent, Jr.. Previously, HS Dent has previously raised and managed a $1.7 billion mutual fund.

DENT was closed in August 2012 is no longer an operating ETF.

Other

Fund.com Inc. v. AdvisorShares Investments, LLC, Index No. 650321/2012, (11/27/12) (Schweitzer, J.) (pages 6 and 7)

Esposito Securities LLC v. AdvisorShares Investments LLC

Acquisition of Vensure Employer Services, Inc.

On November 4, 2009, Fund.com announced its purchase of an equity interest in Mesa, AZ.-based Vensure Employer Services, Inc., a professional employer organization that provides benefits and payroll administration, health and workers' compensation insurance programs, employee training and development services, and retirement benefits plans, such as 401k's, for small and medium businesses. The equity is represented by $21.9 million of participating preferred stock of Vensure.

Fund.com was unable to meet the contractual obligations of the purchase and the transaction was subsequently reversed.

Acquisition of Whyte Lyon Socratic, Inc.

The company also announced that it had purchased 100% of the capital stock of Whyte Lyon Socratic, Inc., a developer of online education programs for investors, debtors and professionals. As part of that transaction, Whyte Lyon's president Joseph J. Bianco was named chairman of the board of Fund.com.

Whyte Lyon Socratic specializes in long-distance learning, and is designed to assist online students in developing the necessary skills to understand financial transactions and financial markets; develop money management skills to help them manage their income and wealth; and reach particular goals, including homeownership, debt reconciliation, and improved credit scores.

Domain Name Sales

In March 2008, Clek Media announced that it had brokered the sale of the domain name “Fund.com” for nearly $10,000,000 in an all-cash transaction, to the company Fund.com Inc. Fund.com Inc never put out a press release on the transaction. The purchase price is the highest recorded price in history, followed by Porn.com ($9,500,000) Business.com ($7,500,000) and Diamond.com ($7,500,000.)

References

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