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The hedge fund, a loud critic of the Mytheresa transfer, interfered in the reorganization process, the U.S. trustee in the case said.

Marble Ridge, the hedge fund that took aim at Neiman Marcus’ handling of the Mytheresa web site, has set off alarms over its own conduct during the bankrupt retailer’s reorganization process.

Marble Ridge managing partner and principal Dan Kamensky had tried to block a potential competing bidder — the financial firm Jefferies Financial Group Inc. — from bidding in one of the transactions in the retailer’s ongoing reorganization efforts, according to the findings of an inquiry this month by the U.S. trustee in the case.

In a statement filed late Wednesday in Texas bankruptcy court, the trustee, whose role involves overseeing the integrity of bankruptcy proceedings, detailed Kamensky’s interactions in July with an unnamed Jefferies employee, citing transcripts of exchanges that took place between Kamensky and the employee over Bloomberg terminal chats.

“Tell Geller to stand DOWN,” Kamensky is quoted as instructing the Jefferies employee, making a reference to Eric Geller, a senior analyst at Jefferies who had informed Neiman’s creditors committee in the case of Jefferies’ plan to bid in the transaction. Kamensky is also cited as telling the employee, “DO NOT SEND IN A BID.”

The report also cites a phone conversation between Kamensky and the Jefferies employee, which the employee had recorded, that shows Kamensky urge the employee not to tell the committee that he had asked them to pull the bid, claiming that he had only meant that the firm shouldn’t make a bid unless it had a serious offer. When the employee disagreed with this characterization, Kamensky was recorded as saying, “[I]f you’re going to continue to tell them what you just told me, I’m going to jail, OK? Because they’re going to say that I abused my position as a fiduciary, which I probably did, right? Maybe I should go to jail. But I’m asking you not to put me in jail.”

Marble Ridge was itself a member of the creditors committee, but left that role as of August. The trustee wrote that Kamensky appeared to acknowledge the severity of his purported actions.

“Mr. Kamensky admitted that contacting and trying to influence a potential rival bidder for property of the bankruptcy estate was wholly inappropriate and a grave mistake,” the trustee wrote in the report.

The transaction in question itself had involved a major settlement in the case to resolve the long-running dispute over the Mytheresa transactions. As part of that settlement, revealed ahead of a hearing in the case at the end of July, Neiman Marcus Group Inc. had agreed to put 140 million shares of series B preferred stock in Mytheresa into the retailer’s bankruptcy estates, meant to go toward the recovery pool for general unsecured claims.

Geller had informed the creditors’ committee that Jefferies had wanted to bid on those 140 million shares, which was what led to Kamensky’s alleged efforts to manipulate the process, according to the trustee’s report.

Neiman Marcus Group Inc. is the parent company controlled by its leveraged buyout sponsors Ares Management Corp. and Canada Pension Plan Investment Board, which purchased the retailer for $6 billion in 2013. The Neiman Marcus Group parent and Mytheresa are not part of the ongoing bankruptcy proceedings.

The trustee’s report noted also that the Kamensky’s efforts to deter the competing bid ultimately didn’t work. The new findings are not expected to affect the retailer’s planned reorganization, and the confirmation hearing on Sept. 4, is expected to proceed as scheduled. The court may also schedule a hearing on the trustee’s findings about Kamensky’s actions.

Representatives for Marble Ridge and Ares declined to comment.

PwC report finds Mifid II has had only a limited effect on improving transparency

Exchange traded fund distribution in Europe is being hindered because market data providers have shown little interest in creating a shared database of equity prices and trading volumes, market participants say.

The comments come as a new report by PwC finds that the EU’s Mifid II regime introduced in 2018 has had only a limited effect on improving transparency in market data in the region. The authors conclude that flaws in the availability, quality and consistency of trading data are impeding the distribution of ETFs in Europe.

Improving trading data aggregation has been a major priority for EU policymakers, who have called for the creation of a consolidated tape — a type of electronic system in which data feeds from different exchanges are banded together to create a summary across all markets.

However, attempts to create the tape have so far failed to get off the ground.

Marie Coady, partner at PwC, said the lack of trading data standardisation meant retail investors did not have detailed insight into the overall liquidity of ETFs, making the products a less attractive proposition.

A 2018 industry initiative led by Bloomberg did introduce some aggregated trade reporting for ETFs, but the service is only available to institutional investors and still contains inconsistencies in data reporting, according to the PwC report.

“The tools available to institutional investors are much less available to retail investors,” said Jason Warr, head of ETFs and index investing for Europe, the Middle East and Africa at BlackRock.

Mr Warr said BlackRock would welcome more vendors sharing their data in a standardised format with asset managers as that could “accelerate retail adoption” of ETFs.

However, Ms Coady warned that standardisation risked “diluting” the commercial value of the data.

A spokesperson for the European Commission said it had been “consulting widely” to find commercial partners to help develop a consolidated tape.

People with knowledge of the discussions said the companies approached by Brussels include Nasdaq, IHS Markit, Appsbroker and Clarus Financial Technology.

An employee working for a large market data provider, who wished to remain anonymous, said: “All of the big data providers looked at creating a consolidated tape but the business case was just not really there.”

The data expert said a major challenge was the practicalities involved in aggregating data from more than 200 trading venues operating in Europe, which would create delays in the speed at which different clients were able to access the data.

“It might only be nanoseconds but that is important to our institutional customers so they will not pay a fee for this.”

While this so-called latency is unlikely to be an issue for retail investors, they lack the resources to fund a consolidated tape, leaving a question mark over “who is going to pay for all this infrastructure”, the expert added.

Some 71 per cent of European ETFs are listed on two or more exchanges, according to the PwC report.

The PwC report also said regulators should pursue alignment in trading venue rules and establish specific arrangements for the clearing and settlement of ETFs.

Nasdaq and IHS Markit declined to comment. Bloomberg, Appsbroker and Clarus Financial Technology did not respond to a request for comment.

Some behavioral researchers say the app’s simplicity encourages novice investors to take bigger risks

Few brokerage apps have captured people’s attention like Robinhood Markets Inc. The Silicon Valley company has turned the complex process of trading stocks into a simple, free swipe across a screen.

But some behavioral researchers contend that that simplicity is turning investing into a game, and nudging inexperienced investors to take bigger risks.

Robinhood and other newer trading apps such as eToro USA LLC and Webull Financial LLC inherit design elements from tech companies that influence user behavior to desired outcomes: Buy a product, use a service, view advertising. Traditional brokerage apps are stodgy. Robinhood blasts users’ screens with digital confetti and makes Netflix-style recommendations for stocks to buy. Buttons tapped to buy a stock are bigger and brighter than those for canceling a trade.

Such cues can exacerbate humans’ behavioral biases and can affect investing behavior, said Thomas Ramsøy, a neuropsychologist who is chief executive of Neurons Inc., an applied neuroscience company.

“If it feels right, we tend to go for it,” he said.

The Robinhood app is set in vivid colors. Its behavior incentives include giving users a trial run with free stock and making money instantly available to trade. Some cues nudge users to repeat certain behaviors and buy stocks based on what other people purchased.

Robinhood Chief Operating Officer Gretchen Howard said the app doesn’t gamify trading or encourage risky behavior. The company was founded with the purpose of erasing barriers to investing and provides a range of educational content on trading through its website, she added.

“We believe that broader participation in the markets is more democratic and can bring opportunities to many. Those who dismiss retail investors as gamblers or gamers perpetuate the myth that investing is only for the wealthy and highly educated,” Ms. Howard said.

“We built Robinhood to be a platform for customers to learn and invest responsibly, and most of our customers use a buy-and-hold strategy with their investments.”

A Robinhood spokeswoman added the brokerage doesn’t make recommendations to buy and sell securities.

The app shows users related stocks that other Robinhood users also own.

Robinhood’s minimal interface has proved to be a draw for younger investors. The brokerage boasts of having 13 million users who have a median age of 31, and was recently valued at $11.2 billion through a new fundraising round disclosed on Monday. The company doesn’t specify how many accounts are active.

Mr. Ramsøy, the neuropsychologist, said the simplified interface can have benefits: Reducing the amount of information visible on the screen can lower the amount of mental stress that can otherwise overload users, and help users make smarter decisions. Yet, he said, the nudges can work in the other direction to prod users into less rational decisions.

Lisa Silva started trading on Robinhood the way many people do: Her friend texted her a referral link. She and her referring friend received a free share for her efforts, choosing among three stocks displayed on what looks like a virtual lottery scratch card.

“Robinhood is the gateway,” said Ms. Silva, who is 35 years old and lives in Ponte Vedra Beach, Fla., with her son.

Ms. Silva received a share of department store Macy’s Inc., and she sold it soon after.

“I knew nothing about trading or the stock market. It really simplified it and was user-friendly from the beginning.”

Now, Ms. Silva spends as much as five hours a day researching and trading penny stocks on her iPhone.

For self-directed brokerages like Robinhood, user trading generates money for the companies even when trades are free.

Marshini Chetty, an assistant professor of computer science at the University of Chicago specializing in human-computer interaction, said Robinhood’s interface shares characteristics of what the software industry calls “dark patterns”—a design choice that steers users down a desired path.

For instance, once you start a trade on Robinhood, it is easier to move forward than to back out of it.

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While confirming the purchase requires a swipe up, there is no clear cancel button. To back out of a trade, the user has to press a link labeled “edit” on the top-left corner and then press an X button.

At rival Webull, users are presented with a “confirm” button to proceed with a trade and an X above that would cancel it. Webull also shows users a toggle to skip confirmations in the future.

But on apps from more traditional brokerages, such as Charles Schwab Corp. SCHW -3.25% and E*Trade Financial Corp., trade confirmations include labeled options to either place the order or cancel it.

Robinhood prompts users to transfer money from their bank accounts and ensures deposits of as much as $1,000 are immediately available for trading—a feature also available on Webull. Schwab, by contrast, takes at least one business day to clear funds and allow users to start trading.

“It’s important to distinguish between accessible, modern design and gamification,” Ms. Howard said. “The incentives we offer, such as free stock, give people a chance to learn about investing and companies.”

All brokerages are incentivized to encourage users to trade. They earn money by sending customer orders to trading firms, which execute them. The practice, called payment for order flow, is controversial but legal in the brokerage industry, helping make commission-free trading possible. While customer orders must be executed at the best-available price, trading firms have many ways to use the trades to their advantage, including to mask larger buying and selling by the firm or its clients.

Robinhood made more than $270 million from selling order flow in the first six months of the year, according to securities filings that were compiled by Piper Sandler analyst Richard Repetto. Schwab made roughly $120 million, while E*Trade pulled in about $190 million. TD AmeriTrade Holding Corp. topped those three, earning more than $525 million.

“Receipt for order flow is a common, legal and regulated industry business practice,” the Robinhood spokeswoman said.

After Ms. Silva’s initial Robinhood deposit, confetti rained down across her screen, congratulating her.

“It makes people think they’re winning,” Ms. Silva said of the graphic.

The confetti graphic has become a Robinhood signature, finding its way into company advertising. “The animation marks a milestone moment,” said Robinhood’s Ms. Howard, who added that confetti isn’t displayed on every trade or deposit.

Getting into Robinhood is far easier than getting out. Transferring accounts to another brokerage takes as long as a week, which is common in the brokerage industry. Ms. Silva, who moved most of her activity to rival Webull, still keeps trading penny stocks in her Robinhood account because she fears their prices could swing too much during the time it takes to transfer them.

Webull, founded in 2017 and based in New York, features a more sophisticated interface and more trading options than Robinhood, including data on short sellers, wider trading windows and a social-media feed similar to Twitter. It also employs bright colors and graphics touting promotions to its roughly 750,000 daily active users, who are mostly in the U.S.

A recent promotion, Webull’s Summer Referral Competition, pits users in a referral race for free shares in technology stocks Facebook Inc., Amazon. com Inc., Apple Inc., Netflix Inc. or Google parent Alphabet Inc. A leaderboard, similar to what people see in videogames and contests, shows users where they stand.

“We are successfully utilizing peer marketing that is extremely popular with our millennial user demographic,” a Webull spokesperson said.

Another rival, eToro, offers cryptocurrency trading in the U.S. and plans to start trading stocks next year. It gives $50 for each referral and to new users.

The platform, which has 14 million users around the world, gives users the option to copy trades made by other people, said Guy Hirsch, eToro’s U.S. managing director. About one-eighth of its U.S. users use the service, which is aimed at traders who don’t have the time to do their own research or are new to investing.

Users with enough copycats are eligible to earn 2% of the total money that is copying them, he added.

“Behavioral research and design elements can also play a positive role in educating retail investors about investing and risks,” an eToro spokeswoman added, “as well as preventing undesired outcomes such as losing more than one has.”

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US gun and ammunition sales surge ahead of election

Industry executives attribute demand to the pandemic, protests and presidential politics

Demand for guns and ammunition is accelerating in the US ahead of November’s election, driven by consumer concerns about protests and civil unrest and by Americans seeing hunting as a socially distanced leisure pursuit during a pandemic. 

Ammo Inc, an ammunition manufacturer based in Scottsdale, Arizona, reported on Thursday that its revenues had surged 125 per cent to $9.7m in the three months to June. 

“Extraordinary” demand from its commercial segment, which sells to the hunting, sports shooting and self-defence markets, had powered its order backlog to a record $45m, said Fred Wagenhals, chief executive.

Mark Hanish, Ammo’s president of global sales and marketing, told the Financial Times it had seen intense demand for bullets for semi-automatic handguns and the AR-15 “modern sporting rifle”.

“In past [election] run-ups, your traditional folks who were already gun owners would purchase more. This is brand new people,” he said, attributing the influx of new buyers to the confluence of the pandemic, the election and concern about “civil unrest and uncertainty”.

Gun sales have spiked in previous election years but slumped after Donald Trump’s 2016 election victory as consumers stopped worrying that a Democratic president could restrict gun sales. Joe Biden, the 2020 Democratic nominee, has said he would require background checks for all gun sales and ban assault weapons sales if elected.

Monthly figures from the National Instant Criminal Background Check System show background checks required by new gun buyers have been running at a level well above 2016’s level since March.

They hit a record that month as coronavirus swept the US, forcing lockdowns that cost millions of people their jobs. That record was quickly broken in June, the month the racial justice protests that followed George Floyd’s death at the hands of a police officer reached their peak

Concern for self protection is looming larger this year than the fear of losing gun rights, Mr Hanish said. As a result, he said, “I don’t expect people to go back to being complacent” should Mr Trump win November’s election.

His comments came 10 days after Clarus Corporation said that its Sierra ammunition brand had seen 36 per cent growth in US sales in the quarter. “This was driven by multiple demand factors like social and civil uncertainties and the upcoming US elections,” Clarus told investors. 

“What's going on in our social environment” meant that North America was seeing uniquely strong demand compared with international ammunition markets, said John Walbrecht, president of Clarus. Aaron Kuehne, its chief financial officer, said Sierra expected heightened demand to continue into 2021.

On its earnings call in July, Sturm, Ruger similarly attributed the appetite for its rifles, revolvers and pistols to concerns about personal protection in the context of “protests, demonstrations and civil unrest in many cities throughout the United States”, and calls in the wake of Floyd’s death to “defund” law enforcement.

The firearms manufacturer said it had seen a “staggering” 47 per cent increase in sales of its products in the first half of 2020. Its website now carries a warning that the demand for many of its products “has far outpaced the supply, especially over the past few months”.

Olin Corp, owner of the Winchester brand, said earlier this month that its commercial ammunition business had seen its strongest quarter since 2016.

John Fischer, Olin’s chief executive, said it had been able to raise prices in April and August and expected demand to stay elevated all year. 

Fears of unrest or restricted sales are not the only factors driving the market, according to executives. Vista Outdoor, owner of brands including Bushnell rifle scopes and Federal ammunition, attributed its recent growth largely to the strength of the shooting sports market. 

“We're seeing stockpiling happening to a certain degree, but the free time has given people more opportunities to recreate in real time,” Christopher Metz, its chief executive, said on an August 6 earnings call, noting that fewer people have been travelling for holidays. 

The National Shooting Sports Foundation polled retailers in July and found that their firearm sales were up 95 per cent and their ammunition sales up 139 per cent in the first half of 2020, compared with the same period of 2019. Some 40 per cent of this year’s firearm purchases were from first-time buyers, it found, with the strongest growth coming from black men and women.

“There has never been a sustained surge in firearm sales quite like what we are in the midst of,” said Jim Curcuruto, the NSSF’s research director. 

Hunting licences and firing range membership figures also pointed to the shooting sports market’s growth potential, said Vista’s Mr Metz.

The growth has strained some manufacturers’ capacity. Olin cautioned that the “surge” had reduced its inventory, limiting its ability to meet the demand, and Ammo Inc is investing at least $2m in expanding its production capacity in anticipation of consumer demand staying high until “at least” the end of its fiscal year next March.