All-Tech, On-Site Set to Go to the IPO Well

The two daytrading pioneers are preparing public offerings.
Author:
Publish date:

Daytraders will have some new shares to play with soon.

One of the largest daytrading firms,

All-Tech Investment Group

, will refile its initial public offering before the end of the month, and five-year-old

On-Site Trading

says it, too, is planning to go public soon.

Harvey Houtkin, chief executive of the Montvale, N.J.-based All-Tech, says details of his firm's offering -- such as the shares and the underwriters -- are still being decided.

Houtkin postponed an IPO of the controversial daytrading firm late last year, saying that he wasn't offered enough money for the shares. He originally filed a year ago to sell 6.25 million shares through little-known

Security Capital Trading

at $8 each. But then he changed underwriters -- signing up equally unknown

ISG Solid Capital Markets

and

Joseph Charles & Associates

-- decreased the offering size to 3.9 million shares and raised the price to $9 each.

This time around, the firm may be looking to raise $25 million to $30 million but also still may be searching for an investment bank to take it public, says one person familiar with the plans.

Houtkin says he's refiling now because ''you have to take the cookies when they're passing the plate.''

Gary Mednick, On-Site Trading's president, says the company is in the process of choosing an underwriter for its IPO and that he expects to hit the market in about four months. The Great Neck, N.Y., company has 700 users, trading either in one of the firm's 11 branches or from home through the firm's remote trading system.

But Mednick says that unlike other daytrading firms, On-Site carries positions overnight. "We're an electronic trading company for active and professional traders," he says.

All-Tech has been at the forefront of many of the radical changes in the trading business, and its efforts have encroached on ground typically held by market-making firms such as

Knight/Trimark

(NITE)

and other traditional securities firms such as

Merrill Lynch

(MER)

.

"Harvey Houtkin helped create SOES

small order execution system, the daytrading industry and the ECN

electronic communications network industry," says the person familiar with the offering. "But he's also cantankerous and there are a lot of firms that won't work with him."

All-Tech and other daytrading firms have been the subject of intense scrutiny for the past six months or so as regulators and the press have questioned whether the business of short-term trading by consumers is a sound one. Daytraders buy and sell shares on average at least 30 times a day, paying commissions to the daytrading firms.

The company freed up the path to an IPO earlier this month when it settled claims that the company used deceptive advertising and made unauthorized transfers of customers' funds, agreeing to pay the

Massachusetts Investor Protection Fund

$50,000 and return $228,000 to customers.

Houtkin says All-Tech has 2,000 daytrading customers across the country who use the company's

Attain

trading system to connect through All-Tech to the stock markets. Attain is an electronic communication network, a small electronic order-matching system that derives most of its order flow from the daytraders. Of the nine ECNs in the U.S., Attain is one of the smallest.

The Attain ECN is seen as a key element in the company's plans and could add considerable value if added to the offering, says the person familiar with the situation. ECNs are increasingly in demand by brokerages and institutions. On Tuesday, for instance,

Waterhouse Securities

said it is buying a 12.5% stake in

Datek Online Holding's

Island

, one of the two largest ECNs.

As originally published, this story contained an error. Please see

Corrections and Clarifications.