Much ado about nothing (Jack Bog's Blog)

I see that the SEC is making a big deal out of some new regulation or other that's supposed to stop people from spreading false rumors in the financial markets and making a buck off the reaction. The problem is that given the way the securities laws have been interpreted, applied, and narrowed over the last decade or so, the new rules probably aren't going to be able to stop such activity. Plus, the first time someone was caught in the act, the Bush Supreme Court would let them off the hook, anyway.

I'm no securities lawyer, but when last I heard, fraud on the market in general wasn't something that anyone would have to suffer a meaningful penalty for committing. And although the SEC is trying to impress its friends on Capitol Hill with its big stick, the plain fact is that we're going to need an even bigger disaster before most of the toupees in Congress get off the deregulation bandwagon and actually do the smart things that were done in the '30s to weed out the crooks. Until then, it's full speed ahead with the cheating and lying.

Comments (3)

Here's a kindred soul:

http://prorev.com/2008/07/swampoodle-report-when-will-media-ditch.html

Posted by George Seldes | July 14, 2008 6:11 PM

As I say, we will need to sink into a Depression and stay there for a while before the next New Deal. The free-market-solves-all-problems Kool Aid is nowhere near worn off yet.

Posted by Jack Bog | July 14, 2008 7:17 PM

Not every investment opportunity falls within the jurisdiction of the SEC. If you are unsatisfied with the role that the SEC -- adding transparency and thereby confidence -- adds to publicly traded equities (wholly voluntary participation by a company, BTW) then just look elsewhere.

The folks who have spawned all manner of special savings funds with characterizations such as "retirement" account and the like might like to confine your choices to the publicly traded companies. This way some folks can make a killing off cashing in their "stock options," or their speculative hedge positions.

How about simply boycotting any investment opportunity where the board is authorized to give (or take any position on) equity options? If you paid for a 51 per cent interest in your neighbor's restaurant would you be satisfied with a loophole that allowed them to unilaterally convert your stake to 25 per cent if they found yet another investor . . . at least for a piece their 49 percent interest? This is complete nonsense, from an investor's perspective.

Such deceptions are so transparent today, without nary a peep of public concern. What makes you think that anything more nuanced regarding trading on insider information (relevant only to publicly traded companies and subject also to the private rules of the private exchanges) or rumor mongering would make any difference at all?

Posted by pdxnag | July 15, 2008 8:19 AM

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Monday, July 14, 2008

Much ado about nothing

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