For many investors, the chance to buy into an initial public offering - with its promise of high returns - is a dream come true. A disclosure LegiStorm recently added shows that a senior aide for the House Republican Conference was able to get such a rare opportunity when his wife bought into what was a highly touted tech IPO in 2012.
A case of political favoritism? While the aide wouldn't comment, it appears his opportunity might be better explained by the billionaire family he married into.
Nick Muzin's most recent personal financial disclosure shows that his wife sold Facebook stock in August that was bought originally during Facebook's 2012 IPO. Muzin currently serves as the director of coalitions for the House Republican Conference under chairwoman Rep. Cathy McMorris Rodgers (R-Wash.), though he was a senior adviser for Scott at the time of the IPO purchase.
Access to IPOs are sought after because the stock often pops on the first day of public trading, yielding high returns for those lucky enough to buy in at the IPO's fixed price. Typically only corporate insiders and the most wealthy clients of the financial institutions handling the transaction are given an opportunity to buy in before the stock goes public.
As it turns out, Facebook's IPO was a huge let-down, with the stock falling from its initial price of $38 a share. Within a few months, the stock had dropped to less than half its original price. By the time Muzin sold his Facebook stock on Aug. 26, 2013 it was roughly $41 a share, yielding a modest profit. According to his disclosure, Muzin's transaction was valued between $50,001-$100,000.
Muzin's father-in-law, Jerry Zucker, was a successful businessman, being ranked on the Forbes list of 400 richest Americans. Zucker, who died of a brain tumor in 2008 when Forbes estimated his fortune to be $1.2 billion, was an owner of such companies as the Polymer Group, Hudson's Bay Co. of Canada and the South Carolina Stingrays.
The STOCK Act of 2012 clamps down on investing in IPOs by senior federal employees who have to file a financial disclosure. Due to the new requirements of the STOCK Act, Muzin also had to disclose transactions involving stock purchased as part of an IPO in the past.
