In the investment banking, a bank assists individual, government and companies to raise funds. The investment bank does this by either acting as an underwriter or acting as the client in the issuance of securities or both. The banks can also facilitate the sale and the trading of equity research. They help the trading banks in the buying and selling of their own securities and assist them match up potential buyers and sellers.
There are several categories of securities that are further divided into subcategories. The first one is derivatives. These are further divided into futures, swaps, forwards and options. The second category of securities is the debt securities. They are mainly comprised of bonds, banknotes and debentures. The third category is the common stocks which are a type of corporate equity.
Securities are the main sources of capital for new corporations and companies while the investment banking is done by an investment bank.
When an investment bank takes up the role of an underwriter like Kenneth Griffin, the bank basically insures the client. This means that the bank takes up the responsibility for complete or partial damage or loss or makes a promise to the client that in case they incur loss, the bank will compensate them.
To raise money for all this, investment banks invite investors for any corporation or company they are representing. If the investment bank is unable to source money from the investors, then it raises the required funds for compensation of the client.
The bankers choose their clients wisely since they share any profits made by the companies or the sales agreements made.
Also, investment banks can be categorized functionally into public or private domain. The information is barred from crossing between the two domains. To provide advice on the investment banking, one has to be licensed and must be subject to FINRA and SEC regulation bodies. There can be small-sized and medium-sized investment banks as well as big commercial banks that have branched into the field of investment banking.
Two of the experts in the investment banking are James Dondero and Kenneth Griffin. He is a Co-founder of the renowned Highland Capital Management with more than three decades experience. He has worked for some of the major companies such as the American Express and Protective Life. Dondero mainly focused on distressed and high-yield investing. Since its start, Highland Capital has helped in the development of solutions that are credit-oriented for many institutions and investors across the world. Currently, Mr. Dondero is a board member for the American Banknote and a chairman of Cornerstone Healthcare, Nexbank and CCS Medical companies.
James Dondero began his career in 1984 at Morgan Guaranty training program where he started as an analyst. He graduated with the highest honors degree in Commerce from the University of Virginia. He is a Certified Management Accountant and has been granted the rights to use the designation of Chartered Financial Analyst. Mr. Dondero has rich experience in securities that are mortgage-backed, emerging markets, leverage bank loans and common stocks.