Valuation Issues Front and Center in Pluris Launch

NEW YORK (HedgeWorld.com)—Later this month, the Financial Accounting Standards Board is expected to release a revised statement about fair value measurements, thus moving closer to adopting new guidelines for valuing illiquid or otherwise hard-to-price securities. Seeing a business opportunity here, Pluris Valuation Advisors Inc., a valuation analysis firm, announced Thursday [Sept. 7] it was open for business. Pluris is an offshoot of Restricted Stock Partners, which manages the Restricted Stock Trading Network, according to a news release from Pluris. The RSTN is a central network on which restricted securities are bought and sold. Pluris said it has created a database, called LiquiStat™ that compiles data from trades made on the RSTN. This database can be used by firms that trade in these restricted securities as a source for assigning those securities values that are in line with the forthcoming FASB guidelines. "Our affiliation with RSP gives Pluris exclusive ongoing access to industry leading data on restricted stock and warrant trades," said Espen Robak, Pluris' newly appointed president, in a statement. "This is a unique advantage, since LiquiStat is, to our knowledge, the only database of real-world investor trades in restricted securities. Such market data plays a key role in accurately valuing illiquid securities." Earlier this year at a series of roundtable events put on by Deloitte & Touche LLP, Deloitte partners made the point that hedge funds in particular face increasing pressure from regulators and investors to provide more reliable valuation and more transparency. Part of the discussion focused on the expected new guidelines from FASB, and suggested that hedge fund managers should be getting ready to live by a new "fair value hierarchy" that is central to the new guidelines. Pluris hopes to play a role in this by providing not only valuations for portfolios of restricted stock, debt securities, warrants and other derivatives, according to the news release, but also valuations for stock options and derivatives issued by public companies; valuations for estate tax, gift tax and income tax returns; fairness and solvency opinions needed for due diligence in mergers and acquisitions; and litigation support. "Valuations of stock options and restricted securities are undergoing intense scrutiny," Mr. Robak said in a statement. "No company of investment advisers can afford the potential liability, fines and even criminal charges that could result from improper valuations. Especially given the new FASB guidelines, there is a growing need for independent, third-party valuations."