Money Stuff Podcast: Labubu Derivatives, Private Credit ETFs, and Fraudulent Founders

Personal Updates and Cultural Phenomena

• 📌 Katie shares her experience getting her first tattoo, a Bat-Signal on her neck, in honor of her late pony, Batman.
• 💡 The discussion touches on the cultural phenomenon of Labubu, furry creatures that have now inspired binary options trading.

The Rise of Event Contracts and Alternative Assets

• 🚀 Kelsi and StockX are partnering to offer event contracts on collectibles like sneakers, Labubu, and trading cards.
• 🎯 These contracts function as binary options, paying out based on whether an asset's price crosses a specific threshold.
• 🧠 While seemingly niche, this mechanism is seen as a step towards an "everything exchange," allowing more items to be traded on prediction markets.
• ⚠️ Concerns about market manipulation are raised, though the current small scale of these markets makes it difficult.

Private Credit, BDCs, and Valuation Concerns

• 📊 Business Development Companies (BDCs) are discussed as publicly traded funds for private credit, akin to ETFs but without redemption mechanisms.
• 🧩 Blue Owl's OBDC (public) and OBDC2 (private) merger was called off due to the public BDC trading at a discount to Net Asset Value (NAV).
• 📉 This discount highlights broader market concerns about the valuation of private credit loans, with some believing they are worth less than reported.
• 💰 The potential for liquidation is mentioned as a possible outcome for the OBDC vehicle, which could be more favorable to shareholders than the discounted market price.

Fraud, Indemnification, and Legal Expenses

• 🕵️‍♀️ The case of Charlotte Jarvis, founder of Frank, is detailed: she sold her student financial aid company to JP Morgan for $175 million, only for it to be revealed her customer database was largely fake.
• ⚖️ Despite being convicted of fraud and sentenced to prison, JP Morgan was obligated to indemnify her legal expenses due to their merger agreement.
• 💸 Astonishing legal bills, potentially reaching nine figures, have been incurred, with JP Morgan attempting to claw back some of these costs.
• 🧐 The discussion also touches on the unusual inclusion of expenses like "cellulite butter" in legal billing, suggesting potential overreach by law firms or misuse of funds.