After reading Michael Lewis’ The Big Short this weekend, it’s clear that some people saw the collapse of the residential mortgage market coming. This American Life had a story this weekend about another investor who also saw it coming: Magnetar Capital. (A magnetar is a neutron star with a magnetic field 100-1000 times stronger than … Read more »
SOX Whistleblower Protections at Mutual Fund Companies
We know that Sarbanes-Oxley offers protections to employees at public companies, but does it also protect employees at mutual fund companies? Yes. At least according to Judge Woodcock of the Massachusetts U.S. District Court. The Employees The decision is for two cases that were combined because of the common defendant. According to the decision, Jackie … Read more »
Weekend Book Review: The Big Short
Michael Lewis has put together a great book on subprime loans, home mortgage bonds and how their crash led to the Great Panic. The Big Short starts with this quote: The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest … Read more »
Compliance Bits and Pieces for April 9
Here are some recent compliance related stories that I found interesting: Bribe Fighter: The strange but true tale of a phony currency, shame, and a grass-roots movement that could go global By Jeremy Kahn in the Boston Globe What good is a currency that is not even worth the paper it’s printed on? That’s the … Read more »
FINRA and Placement Agents
Will FINRA step in to prevent a ban on placement agents working with government investors? You may remember that last August, the SEC published a proposed rule that would create a prohibition on paying a third party, such as a placement agent, to solicit a government client on behalf of the investment adviser: IA-2910. The … Read more »
Are Private Equity-Backed Companies More Likely to Default?
During the Great Panic, there was some grumbling that private equity-backed companies were posing a great risk to the economy. The Private Equity Council has done some research and came to the conclusion that the opposite is true. They are less likely to default. Of course, there are lots of caveats and distinctions in the … Read more »
Accredited Investors under the Restoring American Financial Stability Act
One of the surprises in the Restoring American Financial Stability Act of 2010 is that it proposes to raise the standard for being an accredited investor. Section 412 of the bill would require the SEC to increase the dollar thresholds to be qualified as an accredited investor. Section 413 would require the GAO to study … Read more »
Incentives, Productivity and NUMMI
I recently listened to a great show from This American Life. They covered the story of New United Motor Manufacturing Inc. (NUMMI). General Motors and Toyota opened NUMMI in 1984 as a joint venture so Toyota could start building cars in the US. Toyota showed GM the secrets of its production system and how Toyota … Read more »
Weekend Book Review: The Informant
I’ve had Kurt Eichenwald’s The Informant on my reading list for a long time. It dropped farther down the list after seeing the previews for the Steven Soderbergh movie. Why read the book when you can watch the movie? What raised my interest was hearing a great radio segment from This American Life that tells … Read more »
The SEC Drinks Its Own Champagne
The SEC has named its first chief compliance officer: Kathleen Griffin. She will be tasked with oversight of employee securities transactions and financial disclosure reporting. The creation of a compliance program to prevent insider trading came from last year’s insider trading scandal at the SEC. The Office of the Inspector General reported that “the Commission … Read more »