January 2005 Issue

From the January 2005 eLubin

Peterson of Blackstone Investment Group Blasts Tax Cuts At Global Finance Leadership Forum
President of Tiffany & Co. Receives Alumni Achievement Award
Nobel Laureate Joseph Stiglitz Addresses Fifth Annual Henry George Symposium
"Economic Challenges for the Elected President" Post-Election Debate
"It's a Consumer's Market in a Digital Age" Says EIR Keith Reinhard
Lubin and Education Partner for Visit of Private School Guru



Blackstone Chairman on Running on Empty

"I read one day that the ultimate test for the moral society is the kind of world it leaves for its children. And I thought of at least $45 trillion dollars of unfunded liabilities which is more than this nation's net worth...declining payroll taxes required to fund our retirement programs... the hypocrisy of talking about tax cuts," said Peter G. Peterson, chairman of the Blackstone Investment Banking Group and the Council on Foreign Relations, at the Global Finance Leadership Forum breakfast on December 6, 2004.

Peterson, a former Secretary of Commerce in the Nixon Administration, is the author of the recent book, Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It. He was interviewed by Paul Maidment, editor of Forbes.com and executive editor of Forbes, at a breakfast meeting organized by the Center of Global Finance, under the direction of Professor Jorge Pinto, and co-sponsored by the Accounting Department in conjunction with Forbes.com and Gartner, Inc. The forum, which was held at the Forbes Building in lower Manhattan, attracted leaders from such top institutions as Merrill Lynch, Goldman Sachs, Moody's, and the Financial Times.

In response to Maidment's first question regarding his reasons for writing his new book, Peterson bluntly said it was "a moral issue"—to protect the future generation because "a long-term tax cut is not a tax-cut at all...it's a tax increase on [our] children and grandchildren."

From the Biggest Saver to the Largest Debtor
"As a country we seem to be unable to confront the tension between our objectives and our resources," said Peterson, referring to the country's profound savings deficit and its enormous consumption. "What's happened to America that made it go from the biggest saver in the world in the last century to a country that in October saved 0.2% of its GDP? One-third of the people in America approach retirement with absolutely no savings," he said, adding that they depend only on post-retirement benefit programs, which, in turn, contributes to potential Social Security and Medicare shortfalls. Peterson proposed that "the president [should] appoint a deficit commission of people of the quality of Paul Volcker (former chairman of the Federal Reserve Board), and Bob Rubin (former secretary of Treasury) to find the solution to the deficit problem."

The World's Problem
Explaining that America can no longer depend on foreign capital because "the world is aging far faster than we are" and will soon need the funds for its own retirees, Peterson opined that the "twin"- budget and trade—deficit problems, coupled with daily borrowings of more than $2.5 billion from foreigners, make the country under funded in terms of its defense and homeland security. As a result, he suggested that any economic reforms must be accompanied by commensurate changes in our foreign policy.

"There is a massive imbalance in the world economy," Peterson said, "The rest of the world behaves as though it can indefinitely depend on exports to us and we behave as though we can indefinitely spend a lot more than we produce." He said that the solution will require both global and domestic leadership. "It's the world's problem," he stated bluntly.

When asked how long the U.S. can continue to hold the leadership position in the world if the deficit trend persists and whether some other nation can overtake the leadership role, Peterson said that he would "really like someone to examine how long a country can be the largest debtor in the world ...and also be the biggest leader." He said he didn't know "what the alternative is, but the pools of capital are in Japan and China," he concluded.

President of Tiffany & Co. Receives Alumni Achievement Award

James E. Quinn, president of Tiffany and Co., received the 2004 Alumni Achievement Award – Lubin's most prestigious recognition for outstanding professional Leadership achievements and demonstrated contributions in the areas of community service and social responsibility. "For me and for so many first generation New Yorkers, Pace is a big step forward," said Quinn in addressing over 300 fellow alumni, colleagues, Lubin faculty, staff, and students gathered at the 12th Annual Alumni Achievement Award Luncheon on December 3, 2004.

Quinn recalled that as a winner of one of the prizes in a Pace-sponsored essay contest for eighth graders in the 1960s, he was so impressed with the award ceremony that he chose Pace as his future college. Explaining that the rigorous and robust curriculum offered by Lubin prepared him to undertake a senior role at Tiffany's, he said: "For that [education], I am forever grateful."

Addressing particularly the students present at the luncheon, Quinn encouraged them to keep going forward: "Failure is the natural consequence of trying, to succeed takes time and prolonged effort, often in the face of unfriendly odds. The thing that will lead you any other way [than success] is to invite mediocrity and lose your enthusiasm for trying."

As president of the internationally renowned jeweler and specialty retailer, Quinn is responsible for Tiffany's global expansion strategy and for overseeing retail sales in their stores in 17 countries. He held the positions of executive vice president and vice chairman before taking his current post in February 2003.

Prior to joining Tiffany in 1986, Quinn held several senior financial management positions in the banking field. He has a B.A. in communications from Hofstra University and an MBA in financial management from the Lubin School. He also serves on the board of directors of BNY Hamilton Funds, Inc. and Mutual of America Capital Management. In addition, he is a vice president of the Tiffany and Co. Foundation, supporting arts preservation and environmental conservation, chairman of the Fifth Avenue Association, a trustee of the Museum of the City of New York, and a chairman of the North American Advisory Board for the University College Dublin, Smurfit School of Business.

True to tradition, JP Morgan Chase, was again a title sponsor, providing the venue of their Executive Dining Room in downtown Manhattan. Chase's generous sponsorship allows almost all the proceeds of the event to go directly to student scholarships.

"A Whole World to Win for Those Who Dream"
Timur Rakhmanov, a B.B.A. student in finance and economics, with a minor mathematics, was the recipient of this year's Alumni Achievement Award Scholarship, which is presented annually to a full-time student demonstrating an outstanding academic achievement and promise, as well as leadership in campus activities and community service. Since arriving in the United States from Uzbekistan only three years ago, Rakhmanov has demonstrated remarkable academic success, completing his required coursework in four years instead of five. His willingness to help other students has resulted in him providing tutoring in economics, finance, management, and calculus. A young man of amazing talents, Rakhmanov is a spokesperson for the Lubin School and the Department of Finance and Economics at open houses, president of the Pace International Club, treasurer at the Pace Model United Nations, founder of the Pace Auto Club, cofounder of Pace Hedge Fund Club, and a member of NYSSA, the largest professional organization in the field of finance. Rakhmanov also works with the Center of Community Outreach and Service for Peace. It is no wonder that his internship with Lehman Brothers has resulted in a full-time position offer.

"For me, this award has one simple message: for those who dream, there is a whole world to win. Convert your difficulties into opportunities and you will succeed," said Rakhmanov, to the other students in the audience. "This country has opened its arms for me and made me a part of its colorful mosaic of different cultures and different people and for that I am grateful."

The Eighth Annual Recent Alumni Service Award, which recognizes the professional accomplishments and contributions to Pace University and the Lubin School of Business of a recent graduate, was presented to Elizabeth Diep '00, CPA, an audit senior with PricewaterhouseCoopers LLP, who earned her B.B.A. in accounting, with a minor in Latin American Studies, from Pace University in 2000. While at Pace, Diep served as president of the student body, vice president of the Residence Hall Association, vice president of the National Association of Black Accountants, senator of the University and the Lubin School, and student leader for the Orientation Committee. Cofounder of the Student Leaders Program, Diep received the Lubin School's Excellence in Academics and Community Service award, the Student Life Pace Setter Senior award, and was a recipient of a Pace University Trustee Scholarship, the New York State Professional Certification Scholarship, and an American Association of Hispanic CPAs Scholarship. She is currently active in the Lubin Career Opportunities in the Accounting Profession program, serves as a director of communications for the NY Chapter of the Association of Latino Professionals in Finance and Accounting, and is also a volunteer with the American Red Cross, the March of Dimes Walk America, and Junior Achievement. "Pace was my home for four years," said Diep, "It was not only the place where I learned Accounting, but it was my foundation that opened the door to the world for me."

Breaking all Records
"We have broken all records this year for fundraising at this luncheon and have raised over $290,000 dollars for scholarships," announced Dean Arthur L. Centonze. The proceeds from the luncheon benefit the Lubin Alumni Achievement Award Endowed Scholarship fund, which provides financial support for Lubin students who demonstrate superior academic achievement, leadership qualities, civic responsibility, and financial need.

John E. Boyd '76, president and CEO of EUR Systems and chair of the luncheon steering committee praised the event sponsors: "All of you have gone out of your way to show support for our scholarship fund."

Key sponsors of the event included JP Morgan Chase, Tiffany and Co., Mutual of America, the Bank of New York, and Julien J. Studley, Inc. Deloitte, AIG, Chubb, Ernst & Young, IBM, Hearst, KPMG, Lehman Brothers, PWC, and Saks Fifth Avenue, among other institutions, also provided support for the luncheon.

Boyd also acknowledged the luncheon vice chairs (Kevin Bannon, Tom Cusick, James G. Dinan, Thomas J. Morgan, Cristyne L. Nicholas) and the steering committee, as well as Dean Centonze, and Barbara Rose Aglietti, director of Communications and External Relations at Lubin for their hard work and loyal support of Pace.

Other distinguished members of the Lubin School Advisory Board and the University Trustees present at the luncheon included John A. Gerson '69; Louis F. Laucirica '66, '71; Ian McDougal '54; Maria Ramirez '72; and Lester J. Stephens, Jr. '66, '70.

Nobel Laureate Joseph Stiglitz Addresses Fifth Annual Henry George Symposium

With the world pressing in on itself from all sides, the effects of political and economic actions taken by advanced industrial countries – the United States, in particular—go well beyond national boundaries. With the hot topic of "Globalization and Its Discontents," Dr. Joseph Stiglitz, 2001 Nobel Prize Winner in Economics, a professor of Economics and Finance at Columbia University, held a packed house of Pace University faculty and students at the fifth annual Henry George Symposium, sponsored by the Robert Shalkenbach Foundation, and organized by Robert Isaak, Henry George Professor of International Management. The timing of the lecture was propitious; the symposium was held the day after the U.S. presidential election, November 3, 2004.

What economic and political challenges will the Bush Administration face, both domestically and internationally, over the next four years? Can the U.S. find the ethical balance between acting in its own self-interest and serving the interests of the developing world? In answering these questions, along with focusing on domestic issues of Social Security and Medicare, among others, Stiglitz singled out as the most pressing issue the economic climate of instability and insecurity resulting from the war in Iraq.

"In the immediate aftermath of the war, there was a presumption that Iraq would be able to pay for its own reconstruction, because it's a rich oil country," he said, "[however] most of its oil had already been presold.... An obvious solution to this problem: those who are owed money should forgive the debt." Since the money is owed to countries other than the U.S., he suggested that this is particularly attractive to the U.S. Stiglitz urged that poorer and more deserving countries should be forgiven their debt if the U.S. was able to convince the EU countries and Russia to forgive Iraq's debt. In point of fact, several weeks after Stiglitz's lecture, the majority of Iraq's debt was forgiven, but not that of the other countries in question.

Stiglitz pointed to the administration's attempted Iraqi reconstruction policy of shock therapy, by which all trade barriers are quickly eliminated, and everything except oil is liberalized and privatized. Since this kind of policy not only failed in most countries where it was tried (Russia is an example), but also caused extremely high unemployment, Stiglitz opined, "in the case of Iraq, it is a particularly dangerous policy. You take unemployed young males and give them guns and that's a dangerous mixture.... Some of what we've done has been almost counterproductive," he said.

On Risky Ground with Fiscal and Trade Deficit
Speaking about the interrelation of the domestic economic situation and global economic instability, Stiglitz underlined: "[One] source of instability in the global economy today is the U.S. fiscal and trade deficit." With the U.S. increasingly borrowing from abroad, there is a danger investors will not want to hold so many dollars and the value of the dollar will continue to lose value rapidly. "The issue is global financial instability," said Stiglitz. "[If] everybody tries to dump the dollars, you could have a crisis... This is an enormous risk." With Americans not known for saving, and the government constantly borrowing from abroad, "the fiscal deficit very naturally gives rise to a trade deficit. Unless we do something about our fiscal deficit, it is unlikely that our trade deficit will be able to come down," he said.

The dilemma the U.S. faces is, "if it cuts back on the deficit, it will lead to a weakening of the economy; if it increases the deficit, it contributes to more global instability." Stiglitz's solution: repeal some of the tax cuts for upper income Americans and redirect them to lower income Americans to stimulate the economy and reduce the deficit.

In the context of increasing interdependence between countries and the enormous and growing gap between the haves and have nots, foreign aid to those who are worse off is a moral responsibility. "[However], while the United States is the richest country in the world, it is the stingiest," said Stiglitz, explaining that, according to an international consensus, rich countries should contribute 0.7% of their GDP. While European countries are contributing 1%, the U.S. contributes only 0.15%. "One of the issues we will need to address going forward is how do we best help the developing countries. We need to give more aid, but we also have to have a fairer trade system, fairer to the developing countries," he pointed out.

Stiglitz said the fair approach to solving international issues calls for collective decision-making. However, a multilateral approach to global issues has been badly damaged over the last four years when the United States walked away from a large number of multilateral agreements (for example, the Kyoto agreement on global warming). "I think the U.S. is beginning to recognize that it needs assistance from other countries.... Despite our enormous economic strength, to succeed in some of our objectives, we need the collaboration and help of other countries.... So the agenda for the coming years is a very challenging one: we have to think very carefully of what went wrong... [and] what we can do about these problems in ways that will lead to a stronger domestic and a more stable international economy," concluded Stiglitz.

"Economic Challenges for the Elected President" Post-Election Debate

On Wednesday, November 10, 2004, three experts in the field of finance: Vincent Catalano, CFA, president of iViewResearch, LLC, and moderator; Subodh Kumar, investment strategist, CIBC World Market; and Matthew Morey, associate professor of finance, Lubin undergraduate program chair of finance, and winner of the 2004 Investment Management Consultants Association journalism award, gathered to discuss the economic challenges facing the Bush Administration in its second term. The event was sponsored by the Center for Global Finance in association with the Center for International Business Development.

Deficits, Deficits, and More Deficits
Moderator Catalano opened the discussion by asking about the huge fiscal and trade deficits the U.S. has incurred. "I think [the Bush Administration] is going to continue this spending situation, which will contribute to the deficit," noted Morey, "The problem is that we have a country that basically doesn't save any money and foreigners are buying our debt... [So] when there is a major decline in [the] dollar, you can have vast amounts of capital being pulled out of the United States."

When asked by Catalano whether the U.S. will be able to "grow its way out of this difficulty," Morey argued that since deficit growth is substantial and sustainable, and the war in Iraq contributes to the increased spending, this is an unlikely scenario. Morey also noted that the declining dollar is not going to cure the trade deficit: "We have seen the dollar declining for a long time and the trade deficit increasing for that whole time."

Having a more optimistic view on the deficit situation, Kumar noted that most of the European countries, as well as Japan, have a deficit: "Yes, we need growth. Yes, deficits are an issue. Maybe foreigners won't buy dollars, but they need to have their money somewhere... [So] you must have some obvious alternate area for investment money to go into before we can see the dollar crisis abated."

The panelists' degree of optimism also differed on an issue raised by Catalano that, since the second term of a presidency is often marked by the decline in the economy and stock market, "2006 may be a year when a lot of things that could go wrong, do go wrong." Morey opined, "I do think the currency crisis is an issue if oil prices stay where they are, if we don't calm the situation down, but chances of that actually happening are not enormous, [so] the probability of the worst case scenario is 20%." Kumar doubled the chances (40%) of a currency crisis.

Catalano questioned whether the continued unification of Europe will contribute to the weakening dollar. Kumar explained that for the euro to become the real competitor of the dollar, Europe must first achieve political and military integration. "I don't see the momentum for this in the next three to four years," he said.

Is China's Economic Growth a Factor?
Addressing the potential danger to the dollar coming from the Asian economic block, where a rapidly advancing and economically viable China might dictate the terms of U.S. economic strength through its control of the U.S. debt, Morey pointed to the lack of civil liberties in the Asian countries, which can affect their growth. "I think it is going to be a very difficult situation in the future," said Morey, "The dollar will be influenced to some extent by China...but we have to be careful not to extrapolate their growth rate too far." Morey compared the situation to the massive growth of the Soviet Union in the 50s and 60s, only to have it disintegrate in the late 80s. "[Forecasters] were not looking at how the growth was actually achieved," he said.

Discussing the likelihood of the tax reform happening during the next four years, the panelists expressed polar views as to the benefit of the flat tax rate. "The political reality is that there is a lot of benefit to companies and individuals with the present tax system...a radical step like a flat tax is unlikely," opined Kumar. On the contrary, Morey said: "Most economists agree that flat tax is a good idea. [But] I don't think it is going to happen because it is too hard politically. The political implications of doing it in the midst of everything else are severe."

As for the changes the Bush Administration wants to make to Social Security, which will require a massive amount of money, the panelists were in agreement that it is not an auspicious time to put any privatization policies into effect, with our current fiscal and trade deficits and the enormous ongoing costs of the war in Iraq.

"It's a Consumer's Market in a Digital Age" Says EIR Keith Reinhard

"Advances in technology have really changed the advertising world.... In the digital age, our creativity will have to expand to embrace the new technology," said Keith Reinhard, chairman of DDB Worldwide Communications Group, as he opened his morning lecture to Lubin undergraduate students on the New York City campus on November 3, 2004. A renowned authority in advertising, Reinhard pointed to the challenges the industry will face in the Internet Age: "We are moving from the marketplace, now consumers will choose when, where, and whether to engage with brand messages.... The consumer, not the marketer will now be in control." Consumers' ability to switch channels quickly to escape TV commercials implies that "a commercial needs to be so entertaining or so informative that consumers will not zap it, but choose to record it for repeated viewing."

Technology also brings changes to the way advertisers entertain consumers. The focus on television as the best medium to send a message is now shifting to a multimedia brand experience, "'where all traditional and nontraditional media will be orchestrated to a surround sound experience." Entertainment is "moving towards a two-way interactive process, where the consumer plays an important part. In the era of consumers' choice, we have to think of them more as guests invited to spend time with our brand," said Reinhard to a group of MBA students later that day. To achieve this, DDB Worldwide uses traditional media such as TV, radio, and magazines to bring consumers to various websites where they can spend as much time as they want with the brands in an entertaining way.

Since consumers today are too sophisticated to buy into a secret ingredient idea, and the instant transferability of technology makes it almost impossible to sustain a meaningful product difference as competitors can copy it by next week, "brand decisions are now more and more made on the values of a brand, what the brand stands for."

Brand America
Speaking about brands, Reinhard drew both the undergraduate and MBA students' attention to "a leading brand that has made history for more than 200 years but is now in trouble – 'brand America.' The abundance of research shows that the rating of America is at an all time low around the world," said Reinhard, "We are perceived as behaving badly as a nation, much like the spoiled second generation of successful parents...The present-day decision makers in both the political and business arenas are mostly disliked." He suggested that resentment focused on U.S. foreign policy does not only affect the globalization process, it can be economically damaging as people around the world refuse to buy or sell American brands.

To address the problem, DDB Worldwide has officially inaugurated Business for Diplomatic Action, a not-for profit organization directed by marketing, communication, and media professionals and academic experts in the field of public diplomacy. The mission of the organization is "to sensitize American companies and individuals to the rise of anti-Americanism in the world and to enlist U.S. business communities to take specific action aimed at addressing the issue and reducing the problem."

"People feel left out of the U.S.-led globalization... American popular culture and our collective personality are seen as sort of arrogant," noted Reinhard. To change the negative stereotype about the United States, DDB Worldwide also helped to put together a World Citizens Guide, which gives suggestions for Americans traveling abroad. As the Guide says, with 170,000 American students studying abroad each year, there are a lot of potential ambassadors who can make a change simply by being good world citizens.

"Restoring respect of the Brand America will take the collective actions of many people, but the journey of a thousand miles begins with one step. And on this day after the presidential election, we are driven by the words from the inaugural speech of another U.S. president [Bill Clinton]: 'there is nothing wrong with America that cannot be cured by what is right with America,' and that's what we are trying to mobilize in the U.S. business community," concluded Reinhard.

Lubin and Education Partner for Visit of Private School Guru

Michael C. Koffler, president and CEO of MetSchools, Inc., was Executive in Residence at the Pace New York campus on November 18, 2004. Koffler's visit was a collaborative effort between Lubin and the School of Education.

Koffler described to an undergraduate student group his passion for establishing his own business. Although he started his career as an insurance agent, Koffler said that his ambition to grow his own company inspired him to launch a school for children with special needs, the Sunshine School. This was the first step on his path to organizing and maintaining private schools in New York City and in Buffalo. Today, MetSchools, Inc. employs 505 people, in seven locations, with a total of 150,000 square feet of space, and is the largest privately held non-governmental nursery school provider in New York City. "What I have done is to create employment opportunities for many people in the city where I grew up," commented Koffler.

Moving Forward
Koffler said he is now working on his next project—Claremont Preparatory School in downtown Manhattan. This will be the first independent ongoing school to open in Manhattan in the last fifty years. "The inability of the [Manhattan] private school market to grow physically and to have more classroom slots makes it a very difficult and unnecessarily competitive environment for parents," explained Koffler about his decision to open the school. Trying to accommodate both children with special needs and parents with different expectations, Koffler said he was very concerned about the impact that teachers have on their students. "I choose to pay teachers more money than in other private schools, because teachers deserve to be compensated to the height of my ability as they are the ones who affect the future. I would choose this over profitability."

Internships for School of Ed Students
During the luncheon a small group of faculty, staff and students gathered to welcome Koffler. Dr. Janet McDonald, the dean of the School of Education, who has been working closely with MetSchools on the establishment of the Claremont Preparatory School said: "We are really excited because of this collaboration. [The new school] will be one of our centers for professional development where our students can [work and] learn from the faculty and with the faculty." She said that students from the School of Education will be working in the new school as interns for the spring term while simultaneously going to class at Pace.

To read the rest of this issue, visit www.pace.edu/lubin/elubin/january2005

On Tuesday, May 31, 2005, the Lubin School will welcome its alumni and corporate friends to Wheatley Hills Golf Club in East Williston, NY, for the 7th Annual Lubin Golf Classic. Join us and enjoy the club's challenging Devereux Emmett designed golf course, 5-star cuisine, fabulous raffle prizes, and silent and live auctions. Dell will once again be the sponsor and all proceeds benefit student leadership initiatives.

"The New Challenges: Surviving Increased Competition and Increased Scrutiny in the Securities Industry"

In an interview with E. Stanley O'Neal, chairman, CEO, and president of Merrill Lynch and Co., Inc., that opened the 11th Annual Securities Industry Conference at Pace, Paul E. Steiger, managing editor of The Wall Street Journal, referred to the recent media buzz that the company could be a merger or acquisition target. "We have a unique franchise and a unique brand name and culture...we can create more value in doing what we are doing. [So] as long as this is an answer, we will continue to be independent," commented O'Neal.

"Using the balance sheet to create incremental market share in investment banking ...is not a sustainable economic model. What ultimately distinguishes [our] presence in all major markets both geographically and product-wise is quality of leadership, leveraging of resources across the company, creativity, a high level of impact with clients--and that really is the only sustainable competitive advantage in this business," O'Neal said.

To be more productive and to be able to grow, O'Neal said Merrill Lynch had undergone aggressive cost cutting in recent years to focus more on what he termed critical areas of the business, namely, upgrading technology and expanding their sales force. "If you don't control your overall cost profile, it may become very difficult to make clear cut decisions that have productive impact on your revenue growth and market share," O'Neal commented, "We persisted...and one of the reasons today that we are going to grow our financial advisors' force to exceed any of our competitors' is because we took some actions earlier."

Existing Markets vs. New Ones
During the various panel discussions that followed O'Neal's interview, technological advancements in the industry seemed to be the primary subject of choice. The first panel, moderated by William C. Freund, with leaders of the NYSE, Nasdaq, AMEX, and the Philadelphia Stock Exchange, among others, discussed the most important recent developments in the exchange markets. Technological advancement in the speed of execution of orders was named as the number one factor affecting the markets today. As a result, markets are becoming faster and more efficient. Panelists agreed that consolidation of markets and the evolution of U.S. markets from a single kind of modality to a more complex multi-model enterprise where you have equities, options, and futures, all in one group, like the European markets, was coming quickly, along with more transparency and independence.

Participants in the next panel, moderated by Kim Bang, president of Bloomberg Tradebook, continued the discussion of technology, focusing more on the new trading markets and evolution in the existing primary ones. The use of various electronic communications networks (ECNs) has stimulated a new type of competition, in which the value of the floor broker (as at the NYSE) is threatened. "The only reason for people being down on the floor is to handle a lot of orders, because everything else is executed electronically," argued Seth Merrin, CEO of Liquidnet. The NYSE had argued previously that specialists perform important functions in making effective markets and that its proposed new "hybrid" market would combine the best features of electronic and auction markets.

The panelists also discussed such issues as decimalization, transparency, algorithmic trading, and instant execution, among other things.

Buy Side vs. Sell Side
The future of electronic vs. floor trading was debated by all of the panels. Later that day, some Sell Side panelists opined that the hybrid liquidity of floor trading and the rapid execution of electronic trading is a first step toward genuinely improving future market structure. This changed environment, plus the overcapacity of existing markets, caused panelists to suggest that it was only a matter of time before further consolidation of markets would commence. Other issues addressed included the pressures of increased regulations volume, compliance challenges, and the internationalization of trading.

The final panel for the day focused on regulatory issues and transparency, and the need for all regulation to be independent. Some panelists questioned the relevance of self-regulation in the increasingly competitive environment of the exchange markets. They also underlined the buy side shift from the strategic to the tactical: focusing more on how to sell as opposed to when to buy or sell. There was also discussion of the tactical issues in the institutional size transactions.

Student Scholarships Awarded
At the luncheon, Lubin Dean Arthur L. Centonze recognized five Lubin students for their academic achievement and merit and presented them with scholarships: Alina Alexandrescu, Andrei Androshchuk, Darlina David, Hema Gajarj, and Timur Rakhmanov.

Major funding for the event was provided by the New York Stock Exchange, the Nasdaq Stock Market, Inc., and Bloomberg, among many sponsoring companies.

Budding Entrepreneurs Come Out Swinging at Inaugural Pace Pitch Contest

Clinical Professor of Management Bruce Bachenheimer, who teaches entrepreneurship at the Lubin School, had the idea, and JPMorgan Chase funded it: A Pitch Contest where budding entrepreneurs can pitch their business ideas to a panel of experts who will judge the viability of the concept as a business venture.

Bachenheimer, a successful entrepreneur himself, said he based his idea for the pitch contest on the "Elevator Pitch" concept, popular in the venture capital community. "It is an extremely concise presentation of an entrepreneur's idea, business model, marketing strategy, competitive analysis, and financial plan, which is delivered to potential investors. The premise is that it could be made in a few minutes, should the entrepreneur spot a potential investor on an elevator and have the opportunity to pitch their idea during the brief ride," he explained.

On December 3, 2004, the Pitch Contest took place on the Pace downtown New York campus, with 17 contestants presenting their ideas in one of three categories: New Business Concepts, Social Ventures, or Wild n' Crazy Ideas, to a panel of distinguished judges, representatives from JPMorgan Chase Bank, and an enthusiastic audience of over 60 people from Pace and the outside community.

First year MBA student Rui Jin (Amanda) was the overall winner of $1,000 for her idea of "A Culture Adventure in China." Ms. Rui plans to set up one-month culture immersion trips to China for "American born Chinese youth (ABC) where they would study Chinese language, experience Confucian culture, communicate with local contemporaries, eat authentic Chinese food, and live with host families." Her PowerPoint presentation, lively and enthusiastic description of her business concept, and her poise under pressure were the winning combination for the judges and for the audience as well. Rui has only been in this country for one semester, didn't speak very much English when she arrived, and yet has mastered one of the most difficult things in a new culture – convincing investors to put their money into your business.

The panel of six distinguished judges included: Carolyn Chin, MBA – CEO of Cebix; Clarence B. Jones, C.P.A., J.D. – executive consultant, Marks Paneth & Shron, LLP; Emanuel Martinez, C.P.A., M.B.A. – managing director, GreenHills Ventures, LLC; Brian J. Nickerson, Ph.D., J.D. – director, The Michaelian Institute for Public Policy and Management at Pace; Jerald Posman, M.B.A. – director, Project Enterprise; and Charles F. Ryan, M.B.A. – vice president, Small Business Financial Services, JPMorgan Chase Bank. In addition to the top prize to Rui Jin, each of the judges awarded a $250 prize to a contestant of their choice, whom they thought had been most persuasive in presenting their pitch. The awards were presented at a reception immediately following the contest.

The Pitch contest was held in association with the Small Business Development Center at Pace (SBDC), directed by Ira Davidson, and the University's new business accelerator, Second Century Innovation and Ideas Corp (SCI2), directed by Dr. Victor Goldsmith, associate provost for research and economic development. In addition, the Pace Association for Collegiate Entrepreneurs (PACE), and the University's newest student organization, took an active role in promoting the event.

Pace has been ranked as one of the nation's 'Top 100 Entrepreneurial Colleges' by Entrepreneur magazine. In synergy with Pace's motto of "Opportunitas," this contest, according to Professor Bachenheimer, "serves to better empower students and others through experiential learning to identify, evaluate, develop, present, and capitalize on new opportunities." For more information, visit webpage.pace.edu/pace/pitch_contest/index.htm.

New Leadership Team Expands Horizons of International Center

Dr. Linda M. Sama has great plans for Lubin's Center for International Business Development (CIBD). As the new director, Sama, associate professor of management and international business, is putting the Center into high gear, aiming to expand Lubin's international connections on several levels. Understanding the importance of a strong management team, she has hired John Meletiadis, as the new associate director, to assist her in reshaping the Center.

Sama, in conjunction with Dean Arthur L. Centonze and Meletiadis, has organized a faculty steering committee representing Lubin faculty from all campuses who have expertise in international development. This committee will be instrumental in framing the strategic direction of the Center. "We have redirected the center," Sama said enthusiastically, in a recent interview that included Meletiadis. "We really see ourselves as a student-centered organization representing all campuses, disciplines, at both the graduate and undergraduate level of instruction."

The ambitious plans for the Center include attracting corporate speakers and organizing career seminars for students to learn more about international career opportunities, establishing an International Management Student Club, building a strong partnership with the global AIESEC network ("Association Internationale des Etudiants en Sciences Economiques et Commerciales" – a world renowned international student exchange organization ), building strong alliances with universities abroad that enhance revenue producing opportunities for Lubin, and developing an external advisory board, among other objectives.

In the Spring and Summer 2005 semesters, the Center will be running several international field study trips to Brazil, England, France, Belgium, Sweden, Denmark, Poland, Germany, Mexico, and China. Sama, who herself had been an exchange student in France and Spain, stresses the great value that is provided to students who study abroad: "Global skills require sensitivity and understanding of other cultures and these skills are best acquired through exposure to those other cultures. It's been an eye-opening experience for students who have gone through these programs" she states.

"To have faculty exchanges is [also] one of our goals," commented Sama on the importance of building international opportunities for faculty. "If faculty is on board with the notion of internationalization, there will be more commitment to those kinds of efforts at Lubin," she said. In an effort to put these words into practice, the CIBD team is currently working on a program that will bring professors from overseas universities to lecture and conduct research at the Lubin School.

The CIBD will continue to work on the PanAm Partnership, directed by Professor Stephen Blank. The partnership consists of an alliance of four business schools in the U.S., Canada, and Mexico. This year, Lubin students enrolled in course INB 650—PanAm Integration, will travel to Mexico to meet peers from the other three participating universities.

To make sure all the planned programs are successful, Sama and Meletiadis are working to attract corporate and government sponsors to support their initiatives. "[Sponsor participation] will hopefully open up the dialogue between companies and students, who will benefit from networking opportunities," commented Meletiadis.

When asked why it is important for students to participate in the programs offered by the CIBD, Sama quickly explained that the enriched international exposure the students get "is enormously helpful to their careers and also to their human potential. There is no question in our minds that students with global skills will be the leaders of business in the future," she said.

For more information about international field study trips and other initiatives of the Center, please visit the CIBD Web site

New Associate Director Appointed at the CIBD

John Meletiadis has joined the Lubin School of Business as the new associate director of the Center for International Business Development. Fluent in Greek and Spanish, Meletiadis holds an MBA in international business and marketing from Georgetown University and a BA (magna cum laude) in political science and economics from New York University. He worked as an MBA associate in the marketing department of British American Tobacco (BAT) prior to joining the CIBD. Meletiadis also has had experience working for Citigroup's Global Securities Services division and has been a consultant for PricewaterhouseCoopers prior to returning to business school. His wide range of skills include marketing, financial modeling, and international relations.

Study Indicates That Corporate Tax Shelters Lower Debt Ratio Artificially

Researchers Alan Tucker (Lubin) and John Graham (Fuqua/Duke) looked at 43 large, tax sheltering companies, mainly during the 1990s, and found that these companies avoided billions of dollars in annual tax payments and may have artificially enhanced their financial health to investors. There is high media attention to this study, including The Wall Street Journal, and other outlets. The paper, "Tax Shelters and Corporate Debt Policy," is available at www.ssrn.com/abstract=633042.

Finance Professor Finds Five-Star Ratings Dim Under Close Scrutiny

Professor Matthew R. Morey's recent study of 273 mutual funds that received first-time five-star ratings from Morningstar Inc. found that things began to go bad almost immediately. Seems the rating may be "the kiss of death" because the funds, to some degree, may alter their portfolios to fit their new rating and may not be able to sustain momentum. Morey's study, forthcoming in the Journal of Investment Management has received media attention from The Washington Post, Crain's New York Business, The Capital Times, Contra Costa Times (CA), and Providence Journal, among others. -->