SEC

SEC Enforcer Promises More Protection For Millionaires

By

LindaThomsen2.jpgHere’s a good question: why should taxpayers be subsidizing the supervision of investment vehicles for the wealthy?
The New York Post’s Roddy Boyd writes:

The SEC’s Linda Thomsen, in a speech at a Securities Industry Association confab in Midtown, told attendees she expects the SEC will be filing an increasing number of claims against hedge funds for illegal trading and violating client trust. The SEC is “following the money,” she said.
“These days, the money is in hedge funds, so the potential for abuse, the potential for securities law violations is there because there is so much money there,” Thomsen said

.

We Will Follow The Money [New York Post]

    Feeling the Squeeze: SEC To Propose Tighter Asset Requirements, Funding For Fraud Investigations

    By

    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]

      Is Sarbanes-Oxley Reform On Its Way?

      By

      rustynails.jpgSince the new Democratic chairman of the House Finance Committee, Barney Frank, has already given notice that he doesn’t expect any legislative reforms of Sarbanes-Oxley to come out of his committee, attention has turned to the SEC for possible regulatory reforms. Today the Wall Street Journal reports that regulators have said they will “propose guidance next month to help companies and auditors interpret Section 404 in a way likely to save the time and money.”
      The Wall Street Journal is trumpeting this as a great victory for “business” but we’re not so sure. The “guidance” coming from the SEC could be the relief businesses feeling the strain of Sarbanes-Oxley compliance have been craving. Or it could be like handing a glass of rusty nails to a thirsty man. One things seems clear, the SEC isn’t preparing any substantive amendments to the SOX rules. GodThe Devil only knows what the lawyers and accountants will do with the so-called “guidance.” (Most likely take it as an opportunity to “guide” hourlies even higher.)
      Business Wins Its Battle to Ease A Costly Sarbanes-Oxley Rule

        • 03 Nov 2006 at 3:43 PM
        • SEC

        SEC Does Less, Wants More Money

        By

        Are we the only ones who don’t think that the lack of enforcement actions coming from the SEC is a sign of the apocalypse? As predictecd by Christopher Byron in yesterday’s New York Post, the SEC announced today that enforcement actions are down this year. The stunning decline: 9%.
        There is at least one good reason to think that maybe there’s just less wrong-doing out there to enforce against—and it’s called Sarbanes-Oxley. Afterall, the SEC’s enforcement division spends most of its time on accounting fraud. With Sarbanes-Oxley putting chief executives personally on the hook for their financials, you’d expect that there would be less fudging and less outright fraud. If Sarbanes-Oxley is having any effect deterring fraud, there ought to be a drop off in corporate wrong-doing.
        But you won’t hear that from the boys and at the SEC, of course. They’ve got budgets they want raised and staffers they want to hire. So for them its all about not having enough guys to get the job done.
        SEC Enforcement Cases Decline 9% [Washington Post via DealBook]

          • 02 Nov 2006 at 10:08 AM
          • SEC

          Is The SEC Too Focused On PR To Get The Job Done?

          By

          chriscox1.jpgThat’s the charge coming from the New York Post’s Christopher Byron this morning. His column argues that the SEC is too focused on responding to charges that it has slowed down its prosecutions and been distracted from its core functions as it tries to respond to criticism of law-makers.
          The column actually makes us feel bad for the boys at the SEC. They can’t win for trying. After all, it’s not as if SEC chairman Chris Cox can just ignore the investigation by the General Accounting Office prompted by Senator Charles Grassley’s letter.
          KBR’s IPO Oddity [New York Post]

            Bureaucrats Don’t Hate Hedge Funds, They Just Want Some Of That Money

            By

            That’s the gist of today’s Wall Street Journal editorial discussing the pressure coming for tighter regulations on hedge funds from, well, just about anywhere you look. There’s Senator Charles Grassley’s letter to regulators looking for suggestions on how to regulate hedge funds. (Our bet is that they’ll somehow come up with a couple!) And Connecticut’s Attorney General Richard Blumenthal’s mini-Spitzerism. And the noise from Germany about putting global regulations in place. (Look for more of this if Barney Frank gets control of the House Finance Committee.)
            You see, a regulated industry is an industry whose players need to make campaign donations in order to influence lawmakers. It’s a pretty simple formula: regulate an industry and you instantly politicize it. Which is another way of saying that you monetize the industry for politicians.
            But it’s not all about wringing donations from hedge fund managers. There’s also corporate managers who are tired of getting those pesky shareholder letters from hedge fund types, and worried they could lose their jobs as hedge funds buy up their shares. And those folks have lots of money to spend on campaign donations, as well. It’s a win-win if you’re a politician.
            All the other talk—about “systemic risk” or pension funds or low-liquidity real estate millionaires—is just the sound of a policy in search of a rationale. And that policy, of course, is the enrichment of politicians. That’s always the policy.
            Targeting Hedge Funds [Wall Street Journal]

              Jamie Dimon’s Bank One Fund Brings JP Morgan Under SEC Microscope

              By

              Yeah. He’s still going to be running JPMorgan Chase when all is said and done but its got to be a headache to have to deal with another SEC investigation. This time it’s JPMorgan’s relationship with the Bysis group that’s caught the SEC’s attention. Bisys is the mutual fund administrator that’s paid millions in fines to the regulators. As it turns out, a fund owned by Bank One was mixed up with them, and JP Morgan inherited the problem when it picked up Bank One.
              SEC investigation turns to J.P. Morgan Chase [New York TImes]