Last year, when the SEC adopted rules to require the managers of certain hedge funds to register with them, a number of commentators, myself included, criticized the Commission for its decision, and for the rationale behind it. My comments are available here.
One problem was how in the world was the SEC going to monitor and inspect all of those hedge fund managers when it couldn't effectively monitor the broker-dealers, mutual fund companies, investment advisors, and public companies that it is currently responsible for monitoring?
Well, as the effective date for registration is approaching (it is February 2006) the press is starting to report that the Commission is having second thoughts, and is considering relaxing the registration rules to be less inclusive, and to limit the number of managers who are effected by it.
The problem? Apparently they suddenly realized that they would not possibly be able to effectively deal with all those hedge funds.
Surprise!
Article here and here.
Saturday, October 29, 2005
Friday, October 28, 2005
Libby Indicted for Perjury - When Will They Learn?
The indictment of a top White House official - Vice President Cheney's Chief of Staff - is not a good thing, but I believe the nature of the indictment evidences a significant problem - the fact that for many of us, the truth is only a passing acquaintance, and we are too stupid, or arrogant, to think it is important.
Mr. Libby is certainly innocent until the prosecutor can prove the charges in the indictment beyond a reasonable doubt to a jury. But the indictment demonstrates that some people still don't get it - and there are a number of people who are calling the charges of perjury a "technicality".
When did the truth become a technicality? It is not, and never was. Ask President Clinton, ask Martha Stewart, or any of the other individuals who have been caught in a lie.
The truth is important. If it is not important for your personal morals, it is important to keep your butt out of the slammer. You cannot lie to an investigator, a prosecutor or a grand jury. You simply cannot do it. Don't go to the interview or simply refuse to testify. But do not lie.
The truth is important. It is important in our daily lives, it is important in our professional lives, and it is important when we are being questioned by an investigator.
Does everyone get it now?
Mr. Libby is certainly innocent until the prosecutor can prove the charges in the indictment beyond a reasonable doubt to a jury. But the indictment demonstrates that some people still don't get it - and there are a number of people who are calling the charges of perjury a "technicality".
When did the truth become a technicality? It is not, and never was. Ask President Clinton, ask Martha Stewart, or any of the other individuals who have been caught in a lie.
The truth is important. If it is not important for your personal morals, it is important to keep your butt out of the slammer. You cannot lie to an investigator, a prosecutor or a grand jury. You simply cannot do it. Don't go to the interview or simply refuse to testify. But do not lie.
The truth is important. It is important in our daily lives, it is important in our professional lives, and it is important when we are being questioned by an investigator.
Does everyone get it now?
Tuesday, October 25, 2005
Your Printer Is a Spy
"It sounds bizarre, but did you know that your color printer has likely been modified to provide information about your use of it to law enforcement?" Jim Calloway's blog starts with that line and links to the rest of the story. The government has gotten private businesses, the printer manufacturers, to include codes IN YOUR DOCUMENTS so that the document can be traced back to you.
Read the article, and follow the links to find out if your printer is a spy.
Read the article, and follow the links to find out if your printer is a spy.
Wednesday, October 19, 2005
Are Your Research Analysts Registered?
Last year the NASD required research analysts to be registered with NASD after passing new research analyst examinations. Existing analysts were granted a one year grace period for the new registration requirements, *if* the firm applied for the registration in a timely fashion.
The NASD is now instituting actions against firms who have not registered their analysts, and announced a fine of $150,000 against Green Street Advisors for not registering their analysts.
Aside from demonstrating that the NASD is serious about registration, the case demonstrates the need for compliance. The NASD made a point of stating that the firm continued to allow the analysts to issue reports (104 of them to be exact) AFTER the firm was aware of its failure to register the analysts.
No doubt that the continuation of the prohibited practice after notice added to the severity of the fines.
The NASD is now instituting actions against firms who have not registered their analysts, and announced a fine of $150,000 against Green Street Advisors for not registering their analysts.
Aside from demonstrating that the NASD is serious about registration, the case demonstrates the need for compliance. The NASD made a point of stating that the firm continued to allow the analysts to issue reports (104 of them to be exact) AFTER the firm was aware of its failure to register the analysts.
No doubt that the continuation of the prohibited practice after notice added to the severity of the fines.
Tuesday, October 18, 2005
Merrill Lynch Call Center Problems
The WSJ is reporting that the NASD is investigating the Merrill Lynch call centers, where accounts that are valued at less than $100,000 are placed, rather than being assigned to an individual broker.
The article reports that allegations have been made that "brokers at the firm's two call centers...chose to dump some clients into often unsuitable investments in an attempt to goose firm profits."
Smaller accounts are a problem for the big wirehouses, as they can't seem to make "enough" money from the accounts. Call centers should work, as clients with smaller accounts do not typically need a full time broker. But when the firm starts referring to those accounts as belonging to "poor people" and views handling those accounts as "charity work" as Merrill allegedly did, the firm is going to have some problems.
The article reports that allegations have been made that "brokers at the firm's two call centers...chose to dump some clients into often unsuitable investments in an attempt to goose firm profits."
Smaller accounts are a problem for the big wirehouses, as they can't seem to make "enough" money from the accounts. Call centers should work, as clients with smaller accounts do not typically need a full time broker. But when the firm starts referring to those accounts as belonging to "poor people" and views handling those accounts as "charity work" as Merrill allegedly did, the firm is going to have some problems.
Friday, October 14, 2005
SCOTUS - Start Over - From the National Review Editors on Harriet Miers
Editors on Harriet Miers & Supreme Court on National Review Online: "For all its fury, a consensus was reached early on that point. Leaving aside the president and his employees, even Miers?s fiercest defenders allow that she was not their top pick ? or even their tenth."
Let's call it where it is. We all have an interest in who comprises the Supreme Court, as SCOTUS ultimately defines our law and our lives. But when the National Review comes out with this editorial against Harriet Miers, you KNOW she was the wrong pick.
Let's call it where it is. We all have an interest in who comprises the Supreme Court, as SCOTUS ultimately defines our law and our lives. But when the National Review comes out with this editorial against Harriet Miers, you KNOW she was the wrong pick.
SEC Issues Subpoena To Frist, Sources Say
SEC Issues Subpoena To Frist, Sources Say
And the investigation keeps moving along. Senator Majority Leader Bill Frist has been subpoenaed and will give testimony to the SEC in their insider trading investigation into sales of HCA.
And the investigation keeps moving along. Senator Majority Leader Bill Frist has been subpoenaed and will give testimony to the SEC in their insider trading investigation into sales of HCA.
Fistfights and Poker: Powerful New Dispute Resolution Tools?
I am a huge proponent of ADR, but I need some time to think about this ADR contract clause:
13. DISPUTES. If unanimously hereafter agreed by the parties, any disputes regarding this lease shall be settled by an old-fashioned fistfight or best single draw five-card poker hand."
From Inhouseblog.com
13. DISPUTES. If unanimously hereafter agreed by the parties, any disputes regarding this lease shall be settled by an old-fashioned fistfight or best single draw five-card poker hand."
From Inhouseblog.com
Spitzer Drops Criminal Charges Against Sihpol
After threatening to re-try Mr. Sihpol, the NY AG announced that he is dropping the charges, citing Mr. Sihpol's settlement with the SEC and agreement to a 5 year ban and a $200,000 fine.
According to the New York Law Journal, a Spitzer spokesman said that "we believe that the interests of justice have been served."
No explanation was offered as to why they went after him criminally if a 5 year ban and a $200,000 fine were enough to serve the interests of justice.
According to the New York Law Journal, a Spitzer spokesman said that "we believe that the interests of justice have been served."
No explanation was offered as to why they went after him criminally if a 5 year ban and a $200,000 fine were enough to serve the interests of justice.
Monday, October 3, 2005
DeLay Is Indicted on Two New Charges
I apologize, this isn't a securities law issue, but it is simply incredible. Representative Tom DeLay has been indicted AGAIN.
Apparently after some legal maneavors by Rep. DeLay's defense attorneys, a second grand jury indicted him for conspiracy to commit money-laundering.
Simply amazing.
Apparently after some legal maneavors by Rep. DeLay's defense attorneys, a second grand jury indicted him for conspiracy to commit money-laundering.
Simply amazing.
Chris Byron Weighs in on HCA Insider Trading Probe
Chris Byron, the syndicated columnist points out, as we did a few days ago, that if there was illegal trading in HCA in June of this year there were a whole lot of others who were trading - including the insiders and a bunch of mutual funds who, according to Mr. Byron, were also dumping the stock.
Chris reaches the wrong conclusion IMHO when he states that " If Frist is guilty of insider selling, then so are all the others who sold at the same time. If they aren't guilty, then neither is he" since it is entirely possible that Senator Frist is NOT guilty of insider trading but that others who sold before him are guilty.
But the gist of the piece is on target, and worth the minute that it takes to register at the site.
Chris reaches the wrong conclusion IMHO when he states that " If Frist is guilty of insider selling, then so are all the others who sold at the same time. If they aren't guilty, then neither is he" since it is entirely possible that Senator Frist is NOT guilty of insider trading but that others who sold before him are guilty.
But the gist of the piece is on target, and worth the minute that it takes to register at the site.
Langone: Spitzer has a "Boondoggle of a Case"
Ken Langone, the former head of the NYSE compensation committee, has published an Op-Ed piece in the Wall Street Journal blasting Spitzer. You will need to register with wsj.com, but the piece is worth reading, since we rarely get to see the defense side of a public case, and if Langone is right, Spitzer does not have a case.
Langone claims that depositions in the case have established that he did nothing wrong, and that the case should be dropped. He also repeats earlier comments and questions, asking why the NYS Attorney General is using public funds to prosecute a case to benefit a private entity. (If Spitzer wins the case, the money recovered goes to the NYSE, not the taxpayers of New York)("while his office recently said it is low on funds to pursue Medicaid fraud, he is devoting multiple lawyers to this case -- which will benefit the state not one nickel").
Some other quotes:
"New Yorkers know when their tax dollars are being squandered. They also know what a bully looks like and how to treat one. Mr. Spitzer may be a little lightheaded from all the puff-and-fluff coverage the media give him, but voters could soon deliver a reality check at the ballot box."
"The reliability of Mr. Spitzer's judgment, especially in light of the facts in this case, should be an issue of prime concern when those votes are cast. But he also has a troubling method of making loud legal threats, strong-arming witnesses, and intimidating boards and companies into destructive concessions. Of course, my confidence rests mainly in an impartial court where a fair judge will let the facts stand on their own. Coercing settlements through fear, as anyone can see, is far different from delivering justice."
Langone has had some choice words regarding this suit in the past. Earlier this year Fortune quoted him as saying "I'm nuts, I'm rich, and boy, do I love a fight. I'm going to make them sh*t in their pants. When I get through with these f**king captains of industry, they're going to wish they were in a Cuisinart at high speed."
[explicative deleted].
Langone claims that depositions in the case have established that he did nothing wrong, and that the case should be dropped. He also repeats earlier comments and questions, asking why the NYS Attorney General is using public funds to prosecute a case to benefit a private entity. (If Spitzer wins the case, the money recovered goes to the NYSE, not the taxpayers of New York)("while his office recently said it is low on funds to pursue Medicaid fraud, he is devoting multiple lawyers to this case -- which will benefit the state not one nickel").
Some other quotes:
"New Yorkers know when their tax dollars are being squandered. They also know what a bully looks like and how to treat one. Mr. Spitzer may be a little lightheaded from all the puff-and-fluff coverage the media give him, but voters could soon deliver a reality check at the ballot box."
"The reliability of Mr. Spitzer's judgment, especially in light of the facts in this case, should be an issue of prime concern when those votes are cast. But he also has a troubling method of making loud legal threats, strong-arming witnesses, and intimidating boards and companies into destructive concessions. Of course, my confidence rests mainly in an impartial court where a fair judge will let the facts stand on their own. Coercing settlements through fear, as anyone can see, is far different from delivering justice."
Langone has had some choice words regarding this suit in the past. Earlier this year Fortune quoted him as saying "I'm nuts, I'm rich, and boy, do I love a fight. I'm going to make them sh*t in their pants. When I get through with these f**king captains of industry, they're going to wish they were in a Cuisinart at high speed."
[explicative deleted].
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