Abraxas DiScala is the chief executive officer and co-founder of The Broadsmoore Group
, a financial advisory and investment firm founded in 2009. As a 15-year veteran of the financial industry, DiScala has advised on over $350 million in secured debt, equity, and mezzanine financing transactions across a broad spectrum of industries. For this edition of In This Corner
, he gives his take on how his business is changing the mentality of the investment marketplace.
HousingWire: Tell us a little bit about your business platform. How do you think it will reinstate investor confidence?
We eliminate financial deals and jargon that only 2% of the people in the room can understand. We get back to common sense opportunities in which 100% of the public can feel confident and participate. We offer a 'plain vanilla' approach, where the catch is that there is no catch. We've re-engineered the investment model by looking for only one reason NOT to do a deal, rather than one reason TO do a deal. Broadsmoore will not initiate due diligence or evaluate any investment opportunity unless a humanitarian value is clearly identified. We then evaluate any potential counterparty risk, which is essential in every transaction.
Investors are really looking for clarity and full visibility, not transparency. Our investment opportunities ensure full counterparty verification and validation, maintaining clear, open and honest transactions.
HW: What motivated you to enter in the market?
Rather than entering the market, we are inverting it. Over the last few years, I have personally been the victim of two large-scale frauds that undermined my confidence in the financial system. It became clear to me that the nature of the investment business in its current form was flawed, and in need of a complete paradigm shift. We are simply at a place where people are tired of accepting the status quo and are fed up with 'status woe'. My partners and I created our business to address the major issues plaguing the financial industry and our country: providing liquidity to those who need it, reducing fraud and corruption, creating jobs and looking to the future by supporting humanitarian and socially beneficial objectives.
HW: Being somewhat new to the marketplace, how do you see the current state of housing, finance and the general economy?
The housing and financial markets, as well as the general economy, are still in an illiquidity hangover due to the loss of trillions in net worth that may not be replaced for generations. The pressure created by the many loan modification plans incentivized many Americans to stop paying their mortgages. Home mortgage borrowers not paying their mortgages only exacerbated the loan delinquency rates further driving down the value of the mortgage loans on the books of the banks further eroding their already seriously undercapitalized positions. The banks are not allowed to lend by their regulators unless they maintain minimum capital to asset levels. As banks have fallen below these minimum levels they have been declared insolvent and shut down by the FDIC.
The banks are frozen and cannot fix their capital adequacy dilemma until either their loan loss write-downs are addressed or they get a large infusion of capital. Couple this with massive amounts of fraud and corruption and this country is caught up in extremely tumultuous circumstances. The government has been focused on legacy issues and not on the future.
We are at a unique point in history as we experience the most dynamic expansion ever seen in both regenerative medicine and alternative energy. These important sectors will drive productivity to six times the levels seen during the technology boom of the nineties. We cannot continue to lick our wounds and lament the past. We must regain our strength and presence in manufacturing the technologies that brilliant Americans create.
HW: What is your "new vision for Wall Street"? How do you think it will be accomplished?
My vision is to return to the basics by creating a secure financial marketplace where the client's needs come first. The banking industry has protection in the form of 'know your client.' We introduce protection for the investor with 'know your counterparty.' We are currently wasting a tremendous amount of money and time fixing mistakes that could have easily been avoided by taking the time on the front end to properly investigate and understand our investment vehicles. The immediate-gratification society we are living in must give way to common sense.
By reducing levels of fraud and deception on the front end, investor confidence and participation will climb and we will all make a difference. There is a huge influx of people who care and are coming together to turn this around, and we want to be a big part of it. We keep it simple and smart: Invest in healthy opportunities and share the benefits with all.
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