Taking Hedge Funds to the Cloud

Jose Ibietatorremendia, Managing Director and General Counsel, Liquid Holdings Group, Inc.

Jose Ibietatorremendia of Liquid Holdings Group on why the cloud is the ideal place for financial services

Jose Ibietatorremendia tries to be modest as he describes his company’s latest product that could revolutionize the industry. The managing director and general counsel for Liquid Holdings Group, Inc. describes the company’s new product, LiquidMobile: “It’s optimized for mobile devices. It allows our clients to use our software on a more mobile basis than ever before and substantially improves the look and feel.”

Ibietatorremendia, who goes by surname Ibieta for short, obtained both his undergraduate and law degrees from the University of Pennsylvania’s Wharton School, having always been interested in business and finance. He grew up in New Jersey’s Hudson County—then one of the country’s largest Cuban American communities in the United States. “My father was a lawyer in Cuba in the early ’60s,” Ibieta says. “He couldn’t practice law in the US without returning to law school for another three years, but he still spoke highly of the profession and the role it plays in society.”

Because of his father’s influence, Ibieta grew up knowing he would be a lawyer, and found ways to incorporate his interests in technology, finance, and business throughout his career. He has been part of the legal teams of GE Capital and APX, a provider of market infrastructure to the energy and environmental markets. When APX CEO Brian Storms left that job to join Liquid Holdings in 2013, he asked Ibieta to come with him.

A Winning Product
Liquid Holdings introduced LiquidMobile in early February 2015. It’s a touch- and tablet-optimized, web-based app that allows investment managers to manage portfolio and risk analysis across multiple funds in real time on a mobile device—all the time, anywhere. It has been extremely well received by those who work in finance because it is the kind of product that could revolutionize how things are done in the industry. Just one week after its release, LiquidMobile was named “Best New Cloud Application” at the 2015 HF Week US Technology Awards, which celebrate the country’s top hedge-fund technology providers.

Ibieta, of course, isn’t one of the New York City company’s software engineers; he’s its general counsel. His ability to explain the tech side is something he picked up along the way.

“I’m the only lawyer in the company,” he says. “We’re a 90-person organization, counting the full-time consultants. I’m responsible for meeting all the company’s legal requirements. I work with the board of directors. I work in intellectual property, litigation, and regulatory compliance.”

And because Liquid Holdings is a small company, he’s also secretary to the board of directors and in charge of human resources.

The company’s latest offering, LiquidMobile, is unique and exciting because it’s cloud-based. Like many new software products, LiquidMobile is never installed on the user’s computer; instead, the software is sold as a subscription. That way, the user with a mobile device can use it at any time from any location. Liquid Holdings keeps the software running in a remote location. And the company also has it running at one or more backup sites, so there’s never a crash.

What’s more, because the app is in the cloud, updates can be introduced automatically with minimal interruption to service.

Ibieta references a popular 1980s movie to help explain the concept. “In many ways, cloud-based is a Back to the Future thing,” he says. “In the past, you had dumb terminals that plugged into a mainframe computer. Now, we have mobile computers and less dependence on mainframe. But people are going back to the future by putting their data in a central, secure, backed-up location and using it as an engine to store the data, manipulate the data, and preserve the data. It’s a new user interface, a new way to present the data, a new way to access your personal data, your trading data, your portfolio, and your risk-management measures.”

The Road Ahead
The team at Liquid Holdings has, unfortunately, learned that having a new product that’s well received does not always guarantee smooth sailing. When their largest client, an investment management company, effectively went out of business at the end of 2014, Liquid Holdings was thrown into turmoil, losing many customers.

As a result, the price of Liquid Holdings’ stock had dropped to less than a dollar a share. To be listed by NASDAQ, the stock price must be above the one-dollar threshold. On January 22, Liquid Holdings received a letter from NASDAQ’s listing department stating the company had until July 21 to climb back to the minimum requirement. Should the company be cut from listings, shareholders will have a difficult time buying and selling the stock.

“We haven’t been delisted,” Ibieta says. “We’ve received a notice that we haven’t met a listing requirement. We hope to have that remedied soon. The stock price reflects we’re a young company with limited revenues. We’re a public company, so I can’t comment on items that aren’t public already.”

But he can list an array of successful management-service products that Liquid Holdings offers other than LiquidMobile, as well as indicate that the company is focused on making LiquidMobile the best product in the space. “Two thirds of our people are in development and operations,” he says. “We continue to innovate and develop.”

All of this gives Ibieta confidence that the stock price will rebound. “We have a good product—the right product for the market,” he says.