Tags: floating NAVs, money market funds, money market mutual funds, SEC
I dunno, you want to get excited about the new proposed money market fund rules? You can if you want. To get a sense of the stakes involved, consider the email I got from a reader today worrying that the SEC may wind up “killing say the market for receivables conduit financing in an attempt to ensure that the precise conditions of September 2008 are never replicated.” So: fair, but also, like, farewell receivables conduit financing market, I hardly knew ye. I did not know ye at all, is what I’m trying to say.1
The new rules basically require money market funds to tell you their net asset value, instead of the current rule of not telling you their net asset value, which again is sort of a funny thing to get upset about. In the olden days you could just say your NAV was $1.00 as long as it was at least $0.995; if it fell below that you’d “break the buck” and have to freak out and have massive redemptions and forced sell-offs and so forth. Under the basis-point rounding of the new rules, you’d break the buck at below $0.99995 of NAV and I guess the idea is who has the energy to freak out there, it’s like a basis point man, whatever. Binaries create faster death spirals than continuums. The SEC says: Read more »
Tags: FaceBook, infinite loops, IPOs, NASDAQ, SEC, Zynga
Remember when Facebook IPOed last May and it was a mess? Today the SEC released its amusing order fining Nasdaq $10 million for the mess and explaining what happened. Some computers were having a stressful day at work and so they decided to give up and hide out in the nap room, is the gist of it. I feel like I’d get along with those computers.
What started the mess is that Nasdaq opens the trading of a newly IPO’ed stock with an opening cross where it compiles quotes for a while and then crosses them in one big opening cross before continuous trading starts. And it uses the following process to do the opening cross:
- 1 Get a bunch of orders over a ~20 minute period before trading starts
- 2 Use a program called the IPO Cross Application to calculate the clearing price and shares crossed based on those orders, which takes a few milliseconds
- 3 Check if any of the orders were cancelled during those milliseconds
- 4 If they were, delete those orders and Goto 2
Did you spot the problem?1 Nasdaq’s systems engineers did not, even after the IPO Cross Application had been running on an infinite loop for twenty minutes. The SEC caught it, though, reading their order, I was worried that they’d fallen prey to it as well: Read more »
Tags: Institutional Shareholder Services, ISS, proxy fights, SEC
“SEC Charges Institutional Shareholder Services …” is the sort of start to a headline that might make you think, ha ha ha SEC, always going after the bit players who keep big companies honest rather than the dishonest companies themselves. How’s Egan-Jones doing? But that wouldn’t be fair, for one thing because ISS – which tells lazy shareholders how to vote on proxy proposals and mergers and stuff – is kind of a Goliath itself these days, though not as much as it was last week. And also because this is really quite intensely bad:
From approximately 2007 through early 2012, an ISS employee (“the ISS Employee”) provided information to a proxy solicitor concerning how more than 100 of ISS’ institutional shareholder advisory clients (i.e., institutional investment managers) were voting their proxy ballots. In exchange for vote information, the proxy solicitor gave the ISS Employee meals, expensive tickets to concerts and sporting events, and an airline ticket. The ISS Employee, who had access to all of ISS’ clients’ proxy voting information, gathered the information by logging into ISS’ voting website from home or work and used his personal email account to communicate voting information to the proxy solicitor.
I mean! It’s not that bad for, like, the world, in the sense that institutional shareholders’ voting plans aren’t really nuclear launch codes or anything. I guess you could get up to some nefarious things with them – insider trading on close votes, etc. – but it sounds like they were mostly used for typical proxy-solicitor purposes.1 Which are mostly (1) calling up the shareholders and being all “hey why don’t you vote for us rather than for the other side?” and (2) impressing their clients with the extent of their knowledge about who’s voting how. I mean, why hire proxy solicitors if not for their knowledge of how investors are voting? You could call the shareholders yourself. One hopes. Read more »
Tags: CIBC, CPPIB, insider-trading, Ontario Securities Commission, Richard Bruce Moore, SEC
To get in trouble for insider trading, the information you trade on has to be “inside” information in some sense. Just standing outside a company’s offices and seeing who walks in, and extrapolating from that, is probably not insider trading. Seeing where corporate jets land is mostly not insider trading, to the point that it was once a feature of Dealbreaker, though in general my advice to you is never to use “well Dealbreaker does it” as a rationale for anything. Certainly there are gray areas.
Here’s a delightful new SEC insider trading case. Richard Bruce Moore, a managing director in the private equity coverage group at CIBC’s investment bank, spent a lot of time with his buddy and client, a managing director and LBO deal manager at the Canada Pension Plan Investment Board. In addition to golf and such, “Moore contacted the CPPIB Managing Director at least once a month about deal opportunities and about the possibility of CIBC providing financing for those deals.” In early 2010 Moore noticed that his buddy was becoming less available, which set his sponsor-coverage-spidey-sense a-tingle, and so he did what any good coverage banker would do:
Sometime in March 2010, Moore asked how the CPPIB Managing Director’s other deals were going. The CPPIB Managing Director told Moore that he was working on something interesting and active. Moore then inquired about the possibility of assisting the CPPIB as an investment banker on the deal.
This got a soft ding – “The CPPIB Managing Director did not disclose the parties to the deal, but responded that, as far as CBIC participation, they would have to wait and see how it went” – and so he followed up a few days later with an email asking if CPPIB needed any debt on that deal. This got a little more information: Read more »