Crossroads trading firm closes down amid takeover fears
NEW YORK (AP) Crossroads Trading Co. will close its New York offices, citing weak demand and a decline in trading volumes.
The stock price of the company, which has been trading at less than $1 a share for more than a year, fell about 11% in premarket trading Wednesday morning, wiping out about $500 million of its $6.6 billion market value.
The company was up $1.25 in after-hours trading.
The company’s chief executive, David Lebovitz, said Wednesday morning that the company is closing because it cannot meet trading volumes that it was expecting in the market.
Lebovey said he expects demand for trading on its trading platform to be weaker than it was last year, which was due in part to the acquisition of the brokerage.
Lebovitzer said the company has been struggling to meet trading demand in the past year, and that he expects this year to be similar.
The stock price fell more than 10% after the announcement.
The Wall Street Journal reported Wednesday that the takeover of the brokerages by hedge fund billionaire Peter Thiel’s Founders Fund had led to the company’s collapse.
The Journal said Lebowitz was not available to comment Wednesday morning.
Crossroads is the second-largest private-equity trading firm in the U.S., with nearly $20 billion in assets.
The firm said Wednesday that it expects to close its offices in New York and Washington, D.C.
The firm has more than 3,000 employees and is one of the most well-known private equity firms in the country.
The deal between Founders Fund and the hedge fund came as the stock price is soaring.
Founders Fund CEO Peter Thiel, a billionaire investor, has been a major donor to candidates and political parties, helping to finance candidates who have made his name.