I chuckled when I read this DealBook article about how Fantex Holdings intends to open an online marketplace for investors to buy and sell interests in professional athletes. I laughed because I had been involved with a few of these types of schemes when I worked at the SEC in the Chief Counsel's office. Way back then, the issuers argued that interests in athletes were not "securities" and thus didn't need to be registered. As I recall, those no-action requests went nowhere as the "not a security" arguments were not persuasive.
But Fantex is taking a different approach. On October 17th, it filed a Form S-1 (which has since beenamended), for an IPO in the NFL player Arian Foster - with the intention of selling about $10.5 million worth of "tracking stock," representing a 20% interest in his future brand income. In exchange, Arian would receive $10 million; the balance will cover the costs of the deal. In addition, five pieces of free writing prospectuses were filed - the components of Fantex's site and other selling documents. The Fantex platform itself has filed as a broker-dealer.
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