Totally terrifying thought. But not beyond the range of the barely credible. We’ve written a lot about SEC regulation. And sometimes it did seem as if the SEC was listening. After we celebrated the court decision striking down regulations requiring hedge fund registration, and decried the possibility of an SEC appeal or new regulations trying to get around the decision, the SEC totally decided that it was just going to start studying hedge funds, impose some tighter investor requirements and not go all registration crazy again. Backdating? Well, after we started pointing out that a lot of the backdating “scandal” was a lot less scandalous than it seemed, the SEC’s prosecutorial zeal seemed to slacken.
So, post hoc, ergo hoc? Yeah, probably not. But according to Reuters, SEC chairman Chris Cox is reading blogs and using them to figure out what the public is thinking.
The chairman of the U.S. Securities and Exchange Commission, a technology cheerleader who recently posted on a corporate blog, said on Monday that he uses blogs to gauge public reaction on securities issues.
Christopher Cox, speaking at the Reuters Regulation Summit in Washington, also said the commission will be looking further at what corporate Internet posts might constitute public disclosure.
Cox has been an outspoken proponent on using technology to improve company transparency and investor education, especially pushing to make SEC filings rich with interactive data.
But he also uses technology to get an early peek at how the public will react to SEC action on issues.
Mr. Frank, who used an antineatness slogan in his first federal campaign 27 years ago, has a lacerating wit. His support for predatory-lending reforms, minimum wage increases, and universal health care mark him as one of the most left-leaning lawmakers on Capitol Hill.
Mr. Cox rarely appears in public with a hair out of place or a wrinkle in his perfectly tailored suits. He speaks with deliberation and labors to defuse criticism. Mr. Cox cut his teeth in the Reagan White House, and his votes in Congress earned him an 87% lifetime rating from the U.S. Chamber of Commerce before he became chairman of the Securities and Exchange Commission.
Call it the Millionaire Protection Rule. The SEC will reportedly propose a higher bar for hedge fund investors when its commissioners meet in December. Current rules require “accredited investors” in hedge funds have at least $1 million in assets or have reported income above $200,000 for the past two years. Recently some lawmakers have said that increases in housing prices have upped the value of assets of many otherwise not-so rich Americans, making them eligible to invest—and possibly lose their savings—in hedge funds.
Is this really a problem? We haven’t seen any statistics on how many of these millionaires-in-housing only are putting their life-savings into hedge funds, much less losing their life savings in recently collapsed hedge funds. Without evidence to the contrary, it’s hard not to suspect that this is a manufactured “crisis” cooked up by regulators and lawmakers.
On a positive note, SEC commissioner Chris Cox’s proposal to up funding for investigating hedge fund fraud is probably a good idea. The secrecy of many hedge funds creates opportunities for fraud, and just the knowledge that the SEC is taking this seriously should provide some disincentives for would-be wrong-doers. SEC wants bigger bankrolls for hedge fund investors [Bloomberg in the Chicago Tribune]
You know that guy who gets a laugh for one joke and can’t help taking things a bit further. The one who always winds up taking it too far. Uncomfortably far. And that joke-too-far usually involves some kind of unconventional sex act. Yeah. Chris Cox is that guy.
From the New York Times yesterday:
Manipulating stock option grants is no laughing matter. Federal investigators are combing through the files of more than 120 companies looking for evidence of backdated options. Dozens of executives have resigned or been fired. Top officers at two companies face criminal charges.
But at a corporate governance conference sponsored by Stanford University in Washington last week, Christopher Cox, the chairman of the Securities and Exchange Commission, had some fun with the terminology used to describe certain stock option abuses.
“Spring-loading sounds likes the type of thing you ask your kids not to do inside the house,” Mr. Cox said, referring to the practice of granting options ahead of positive news to reap an instant paper profit.
And backdating? “Backdating sounds like something that you wouldn’t want your daughter to do anywhere,” he added.
We’re not sure exactly how he survived the boredom (we did with the help of Adderall), but Gary Weiss, author of Wall Street Versus America, also watched the banking committee hearings. He thinks these were less stupid than the judiciary committee hearings. And he too found it surprising that not one word was voiced about Gary Aguirre.
The elephant on the panel was the whistleblower Gary Aguirre, who was fired after trying to question Morgan Stanely’s John Mack in a trading probe. Unless I missed it, as I may have dozed during the fascinating repartee, not one question about Aguirre emanated from the lips of the senators.
It’s important, by the way, to distinguish between Aguirre’s allegations and the effort to suppress him. As veteran financial journalist Don Bauder noted in a good wrapup on the subject, Aguirre’s widely publicized allegations have been attacked as “flimsy.”
Whether Aguirre is credible or not, this whole Mack business is troubling and should be investigated — by actual investigators, not the U.S. Senate.
That was it? The Senate banking committee held its hearing on hedge funds today and the only impression we came away with was that the perennial faith of Senators and bureaucrats that they can pass laws and regulations to protect investors from fraud and loss is, like, stronger than ever. It was like stumbling across a group of druids in the woods practicing a long-dead religion.
Some highlights from our viewing of the webcast after the jump.