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HomeHigh Frequency Trading: ‘Competitive Edge or Unfair Advantage?’
Posted by Larry Doyle on August 26th, 2009 6:04 PM |
There is no doubt that the 21st century will be driven by new and dynamic growth in technologies. Within the financial industry, Waters is a leading periodical focused on the intersection of finance and technology. From their own website, we learn:
Waters, now in its 15th year, looks at how technology is driving the securities industry and how the evolving market structure worldwide is driving technology.
Since its launch in 1993, Waters has been relied on by financial technology professionals worldwide for focused, in-depth coverage of financial market data and technology. The financial services industry spends more on technology than any other. Banks and investment banks — whether global or regional — rely on technology to help keep their traders ahead of the competition. As firms trade up their systems, Waters defines the challenges that the top global financial services confront, be they old school issues like trading room systems and operations or new business propositions like consortia portals and e-commerce spin-offs.
In the August issue of Waters, there is an interesting debate focused on the highly charged topic of high frequency trading. This article, “Waters Debate: Competitive Edge or Unfair Advantage?”, engages Kevin McPartland a senior analyst with the Tabb Group, Al Berkeley chairman of Pipeline, and a Wall Street veteran who writes at Sense on Cents.
For those interested in the topic, I strongly encourage you to read the entire piece. For those interested in the SparkNotes assessment, I provide the concluding paragraphs.
Mr. McPartland, a 10 year Wall Street veteran, writes in defense of high frequency trading under its current construct:
We live in a society based on and grown out of capitalism. Being smarter and faster than your competitors, whatever your business, has been a guiding principle of companies worldwide for decades. So why are these ideas suddenly thrown out when it comes to high-frequency trading models that have been around for nearly a decade? No one likes to lose, especially traders, and now that a small handful of relatively unknown firms are making profits in the billions, those not in the loop are crying foul. Am I unhappy that the guy next to me in the commuter lot has a Porsche and I don’t? Sure, but that doesn’t mean he didn’t earn it fair and square.
Mr. Berkeley, a 30 year Wall Street veteran, weighs in for changes in the structure of the equity markets:
There is a mismatch between the market structure the US has for equities and the market structure it needs. High-frequency trading is profitable because wholesale trades are being executed in a market designed for retail trades. The structure we have is good for small trades and retail trades but it is inappropriate for wholesale trades-the trades that institutions need to execute on behalf of millions of citizen-savers.
A market structure that addresses this problem is one that combines access to three distinct types of liquidity pools with three sets of rules of engagement, to meet the different circumstances in which institutional traders must operate. These include a wholesale facility for large orders, a facility that harvests liquidity in the retail markets without being seen, and a facility that allows investors with liquidity resident in their blotters-that is, not yet committed to trade-to trade together.
Early adopters are finding 30 percent to 40 percent reductions in total trading costs.
More importantly, a few sophisticated institutions recognize the value of supporting a counter-balance to the high-cost market structures that force institutions to pay too much for liquidity.
We believe these are highly disruptive innovations that threaten the traditional business models on Wall Street. They are unrecognized as such now, but this will not be the case in a few years.
Your resident host at Sense on Cents, a 23 year Wall Street veteran, opines that the equity markets should embrace a fixed income perspective to electronic trading:
Tradeweb allows fixed-income investors to engage Wall Street dealers across all of the aforementioned markets with trades executed within a matter of mere seconds. The playing field is completely level as dealers enter price levels, stand by them, and execute trades. If a Wall Street dealer is delinquent in responding to an investor inquiry, so be it.
Were Tradeweb to allow one dealer to see another dealer’s price level or allow dealers to instantaneously flash price levels without obligation of standing by their price, there would be hell to pay. Why? If dealers and investors knew that certain entities were provided preferential treatment by Tradeweb, then there is no doubt in my mind that Tradeweb would be out of business tomorrow. Make no mistake: The speed limit on the trade execution lane of the investment superhighway is extremely fast. How fast? Trades are executed within a matter of a few seconds. It works just fine for the hundreds of billions in daily volume compared to the relative odd lots traded in the equity market.
I strongly believe in and embrace technology. I also have a soft spot in my heart for fundamental fairness and integrity. I think all global equity exchanges should implement fixed-income trade practices. I believe they are the best of both worlds.
I thank Waters for the opportunity to add to the discussion and debate on the high frequency trading topic, which is certainly not going away.
LD
‘Banking Crisis Dwarfs Depression’ by John Lounsbury
Posted by Larry Doyle on August 26th, 2009 2:32 PM |
In the course of my writing, I have read the works of some very informed and enlightened individuals, and I’ve learned a lot in the process. I welcome sharing these insights and perspectives.
The other day I saw that John Lounsbury cross-referenced my work from August 20th, “Capitalism Without Failure is Like Religion Without Sin.” I was flattered by his referencing my work, so I started to read some of Mr. Lounsbury’s work. I am pleased to present as fine a piece of writing on the historical perspective of our current banking crisis as I have come across.
Mr. Lounsbury is a financial planner in North Carolina, writes his own blog (PiedmontHudson), and also writes for a few other outlets. He addresses our current financial crisis in comparison to the S&L crisis of the late 1980s and also in comparison to the Great Depression. Lounsbury reviews these periods from the standpoints of deposits, assets, number of bank failures and branch closings, the shadow banking system, all while adjusting for inflation.
I am more informed from having read this work. I applaud Mr. Lounsbury and think you will as well. I humbly submit Banking Crisis Dwarfs Depression.
LD
Sarkozy Ups the Ante on Banker Compensation
Posted by Larry Doyle on August 26th, 2009 9:26 AM |
French President Nicolas Sarkozy
How is it that the country that is supposed to be the bastion of capitalism and free enterprise is taking serious direction on the topic of banker compensation from none other than French President Nicolas Sarkozy? The fact that Sarkozy is elevating the banker compensation topic prior to the G-20 meeting in Pittsburgh in September is a clear indication that the powers that be in Washington and on Wall Street have failed miserably on this topic.
There is NO doubt those on Wall Street would like to return to ‘business as usual’ as quickly as possible. Little do the Wall Street wizards appreciate that the ‘usual business’ brought our country to its knees. Let’s address the ultimate motivator, that is, compensation.
Wall Street’s initial response to potential increased oversight of the compensation process has been to increase salaries as an overall percentage of compensation. From a productivity standpoint, I view this maneuver as counterproductive. Increased salaries will increase fixed costs and actually serve as a disincentive. The fact is compensation needs to be viewed in its entirety, both salary and bonus. The entire process should not be gamed by firms to appease regulators.
Bloomberg highlights French President Sarkozy’s approach toward banker compensation in writing, Sarkozy Threat to Shun Banks on Pay Draws U.S. Alarm:
Aug. 26 (Bloomberg) — French President Nicolas Sarkozy’s plan to shun bankers who don’t accept pay limits was met with alarm by analysts and investors in the U.S., where Citigroup Inc. and six other bailed-out companies are being grilled by the government on how they compensate top-paid executives.
I am definitely not for strict government control of private enterprise compensation; however, if the boards of these private enterprises are not performing to protect the industry, the franchises, and the shareholders, then those boards need to be exposed. From my standpoint, the boards are a large part of the problem. Why? The boards are in the pocket of the senior executives. The senior executives have shown themselves to be excessively greedy and disinterested in protecting the industry and, in turn, our country.
Moving right along, I have always maintained that Wall Street banks must be obligated to fully align compensation with returns generated and risks remaining on the books. What do I mean? (more…)
Goldman Calls ‘Huddle Up’
Posted by Larry Doyle on August 25th, 2009 4:20 PM |
Huddle up!!
Goldman’s play calling in regard to the dissemination of short term trading tips is receiving increased focus. The Wall Street Journal highlights Regulators Examine Goldman’s Trade Tips:
Securities regulators are examining weekly meetings at Goldman Sachs Group Inc. in which research analysts give tips to traders and then to big clients, as the Wall Street giant considers disclosing these so-called trading huddles to all its clients.
The Wall Street Journal reported Monday that analysts at Goldman sometimes shared with traders and key clients short-term trading tips that sometimes differed from the firm’s long-term research.
Examiners at the Financial Industry Regulatory Authority, the industry self-regulatory body known as Finra, and the Securities and Exchange Commission intend to ask Goldman for more information on these weekly get-togethers, people familiar with the matter said.
Internal documents show that at times, these short-term trading tips differed from Goldman’s long-term research. Critics complain that Goldman’s distribution of the trading ideas to Goldman traders and major clients hurts other Goldman customers who aren’t given the opportunity to trade on the information, and may be relying on the firm’s longer-term research to make investment decisions.
The huddles, and what is discussed during or after them, currently aren’t disclosed in Goldman’s long-term research. On Monday the firm internally discussed adding information about the service on its client Web site. Some firms, such as Morgan Stanley, also give stock ideas to clients, but disclose the service in their longer-term research and on its Web site.
My gut instinct tells me this business practice at Goldman may present regulatory issues at times but not necessarily always. The fact is there are times when a research analyst may feel a security is slightly overbought or oversold based on some short term technical dislocations. As such, he may share that assessment with traders and select clients.
However, there may be other times when a security is undergoing some fundamental changes and a research analyst is thinking about changing his call but does not immediately act upon it. The analyst will still highlight the short term mispricing.
Welcome to the very gray world of Wall Street research and trading.
Based on my experience on the fixed income side of the business, Goldman actually stopped publishing research around 2003 because they felt they were not being paid for it. Goldman actually had research analysts on the trading desk for the sole purpose of talking to clients. They did not publish written research.
At Bear Stearns in the mid 1990s, we would have weekly trading and research calls broadcast to all our clients. We screened clients from competitors by requiring clients to provide a passcode for the call. We still felt there were times when other Wall Street dealers accessed our calls.
Will any regulatory issues come from Goldman’s trading huddles? In my opinion, nothing big will develop. Goldman will likely post on its website a more explicit statement highlighting that short term trading tips are at times provided to capture market anomalies. The regulators will sign off on it and life will go on.
Be mindful, though, that Goldman is an aggressive short term trading shop. Given the lay of the land on Wall Street now, clients have to talk to Goldman whether they truly want to or not.
As is often said, if you are wondering who the pawn is, it’s probably you.
LD
BREAKING NEWS: Amerivet Complaint Against FINRA Alleges Madoff Investment
Posted by Larry Doyle on August 25th, 2009 10:47 AM |
Two weeks ago, Amerivet Securities filed a complaint against FINRA (Financial Industry Regulatory Authority), the Wall Street self-regulatory organization. This morning, Donna Mitchell of Financial Planning provides further insight on this complaint. Ms. Mitchell writes FINRA Rebuffs Amerivet’s Demand to Inspect Records. She reports:
The Financial Industry Regulatory Authority (FINRA) says it will not open its books and records to inspection by Amerivet Securities, the California brokerage firm which recently sued the regulator.
“We disclose a great deal of public information in our annual reports, far more than we are required to do,” says Herb Perone, a spokesman for FINRA. “Our records are not open for public examination.”
Sense on Cents questions why any financial self-regulatory organization mandated to protect investors would not be required to fully open all of its books and records for public review. Additionally, having extensively studied all of FINRA’s annual reports as well as those of its predecessor, the NASD, I echo the questions being raised by Amerivet. Does FINRA have any appreciation for the need for total truth and transparency in our markets and economy? The questions beg: why won’t FINRA fully open its books? are they trying to hide something? do they have reason to be concerned?
OPEN THE BOOKS!!!
Financial Planning continues:
The request for records is part of a civil suit filed Aug. 10 in the Superior Court of Washington, D.C., by Inglewood, Calif.-based Amerivet Securities. It stems from a July 23 letter sent to FINRA from Amerivet, in which the company initially asked to review FINRA’s documents.
In the lawsuit, Amerivet accuses FINRA of a litany of wrongdoings, from mismanaging the organization’s investment assets to placing substantial funds with Bernard L. Madoff Investment Securities, the former broker-dealer and investment advisory firm that was brought down amid a $65 billion Ponzi scheme.
WOW! The allegation of an investment by FINRA in Madoff is a BLOCKBUSTER. What information did Amerivet and its legal representation unearth to make this allegation? This information must be revealed and FINRA must open its books and records to address this charge. (Click on image to access copy of Amerivet complaint)
Financial Planning further reports:
Amerivet also alleges that FINRA failed to regulate and oversee the operations of large securities firms such as the former Bear Stearns & Co., the former Lehman Brothers, Merrill Lynch & Co., and Stanford Financial Group.
Amerivet also claims that FINRA overpaid its executives, sustained investment-related losses of $568 million and separately incurred substantial losses in the auction-rate securities market. “FINRA has failed in what it represents in its advertising to be its core function, i.e. the protection of investors,” Amerivet says in the lawsuit.
Is there any doubt that FINRA has failed to protect investors? Is there any doubt that senior executives at FINRA were paid handsomely?
In regard to the auction-rate securities allegation, is Amerivet maintaining that FINRA lost money on the ARS which it owned or is Amerivet referring to money lost by investors? Details of FINRA’s liquidation of ARS in 2007 must be released. Did FINRA front-run the market in the course of selling its own ARS?
OPEN THE BOOKS!!
Financial Planning gains a degree of insight from FINRA and reports:
FINRA would not comment about the lawsuit directly, but Perone said the organization had steered clear of investing with Madoff.
“As for any claim or question as to whether we had money invested with Madoff, we had no investments of any kind in Madoff or in any of its feeder funds,” Perone said.
The allegations and implications of the Amerivet complaint strike right at the core of our financial regulatory framework. Any credible media outlet should be running the Amerivet complaint as a lead story.
The American public deserves answers.
OPEN THE BOOKS!!
LD
Related Sense on Cents Commentary:
Amerivet Securities Files Complaint vs. FINRA for Release of Investment Information and More (August 17, 2009)
FINRA Must Play by Its Own Rules (August 19, 2009)
*****************************
UPDATE as of 11:20AM – Financial Planning has removed from its website the article referenced in this post. I am in the process of receiving the actual Amerivet complaint and will review it and comment later this afternoon.
UPDATE as of 12:05PM – I just received a copy of the Amerivet Securities vs. FINRA complaint. See pages 8-9, points #24-28 for details regarding the allegation that FINRA was invested with Bernie Madoff.
Goldman’s Jan Hatzius: ‘Substantial Hangover’ in U.S. Economy
Posted by Larry Doyle on August 25th, 2009 8:22 AM |
Say what you want about Goldman Sachs in its entirety, but I tip my cap to Goldman economist Jan Hatzius for an extremely forthright and aggressive interview I just watched on Bloomberg Surveillance.
In so many words, Hatzius seems very concerned about a double dip recession here in the United States in 2010. That is my assessment. Hatzius himself did not use that phrase.
Highlights of his commentary include:
>> call for a 3% GDP in both the 3rd and 4th quarters of 2009 driven by fiscal stimulus programs and inventory buildup.
>> without the benefits of the stimulus and further inventory rebound, the U.S. economy will suffer from a ‘substantial hangover’ in 2010.
>> Hatzius does not see China or other surplus nations suffering from this hangover. He is quite bullish on prospects for the Chinese economy.
What are the effects of our hangover and implications for government policy?
>> likely double digit unemployment with no quick improvement
>> Federal Reserve will likely keep the Fed Funds rate at 0-.25% for all of 2010
>> no inflationary pressures for a few years
>> given lack of growth in the private sector, very real chance that the Federal Reserve will extend its quantitative easing program in which it purchases liquid assets (U.S. Treasury debt, agency debt, and mortgage-backed securities). Hatzius threw out that there is a very real possibility the size of the Fed’s balance sheet could double to $4 TRILLION. Be mindful that the Fed’s balance sheet has already doubled over the course of this crisis!!
>> substantial decline in commercial real estate has yet to occur.
>> Cash for Clunkers will likely add .3 to .4 to current quarter GDP, but some of that is certainly pulling demand forward and will be ‘paid back’ with slower growth in 2010.
>> when the economy does gain traction, he believes Bernanke (whom Obama will reappoint to another term) will raise rates aggressively.
Hatzius’ assessment is consistent with the Main Street economy which remains disconnected with Wall Street price action. While Main Street has a headache and hangover, Wall Street rocks on with easy money from Washington.
When will Main Street get in on the action?
LD
Bank of America Credit Cards Less Than Prime
Posted by Larry Doyle on August 24th, 2009 3:20 PM |
Why are banks tightening credit to the extent that they are extending credit at all? The mere fact that so many of their current loans and credit lines are increasingly delinquent and defaulting. Of the largest credit card outfits, one bank stands out as holding the worst performing credit card portfolio. Who might that be? Bank of America.
In fact, by banking standards Bank of America’s credit card portfolio would be considered sub-prime. Bloomberg highlights this development in writing, Bank of America Shuns Sales of Card Debt, Ducks Subprime Label:
Bank of America Corp., saddled with the worst credit-card default rates among its biggest rivals, is shunning the asset-backed securities market it tapped for $13.7 billion last year.
JPMorgan Chase & Co., Citigroup Inc. and American Express Co. are among issuers that sold $21 billion of card-backed debt this year through the Term Asset-Backed Securities Loan Facility, a Federal Reserve lending program to spur bond sales. Bank of America, the only major card-issuer that didn’t sell any, lacks enough quality loans in its credit-card trust to sell TALF bonds without being labeled a subprime issuer.
“I don’t doubt that Bank of America would like to re- engage that market,” said Michael Nix, who helps manage $600 million, including shares of the lender, at Greenwood Capital Associates in Greenwood, South Carolina. “The credit-card securitization market is starting to thaw, but there still isn’t a lot of demand, so the cost of issuance may be higher than the bank thinks is worthwhile.”
Christopher Feeney, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment.
Bank of America’s 13.82 percent credit-card default rate in July, the highest among the biggest lenders, helps explain why loans in its credit-card trust are shy of the threshold that would allow it to sell debt through TALF and be labeled a prime issuer
Why is BofA’s credit card portfolio so much worse off than its major competitors and what are the implications of this reality? (more…)
Cerberus Investors Head for the Exit
Posted by Larry Doyle on August 24th, 2009 12:38 PM |
Oh how the mighty have fallen.
Cerberus was once one of the highest profile private equity and hedge fund players on Wall Street. Today, Cerberus is being seriously humbled.
Cerberus entered the public realm late last year given the problems within the automotive industry. Cerberus had taken a controlling stake in Chrysler. I opened the doors on this private equity machine last December 11th by writing, “Who and What is Cerberus…??” I wrote:
While the debate in Washington over a potential rescue package of the domestic auto industry seems to be ending and a short term “bridge loan” is being arranged, I empathize with the innocent laborers and families within these companies and across the industry who have truly suffered from the imprudent management of this business model. One outfit that is heavily involved in this industry, though, deserves no sympathy. Everybody knows General Motors, Ford, and Chrysler, but not many people know of Cerberus Capital Management.
GM and Ford are publicly traded entities. Chrysler, however, is 80% owned by one of the largest private equity funds in the business. If any company understands risk, the cost of capital, business models, restructurings, leveraged buyouts, asset liquidations, return on equity, etc it is Cerberus Capital Management.
Fast forward 9 months and a large percentage of investors in Cerberus have seen enough and want their money back. The Wall Street Journal highlights this development in writing Cerberus Investors Choose to Withdraw:
Clients of Cerberus Capital Management’s core hedge funds have opted to withdraw the majority of money from the funds, marking a sharp rebuke to the weakened firm and its boss Stephen Feinberg.
Clients owning more than $4 billion of the $7.7 billion in assets in the Cerberus Partners hedge funds have opted to liquidate their holdings, rather than allow Cerberus to collect its typical fees and continue making new investments, say people familiar with the matter.
Mr. Feinberg, striking an apologetic tone, personally called Cerberus clients this week to share the tally, which was current as of Friday and could still change, according to people familiar with the discussions. Cerberus executives hope that some investors who have opted for withdrawals can be convinced to change their minds, people familiar with the matter said.
Investors had been told they had until this week to vote on the fate of their hedge-fund holdings, a choice that was fraught, the people say. The tradeoff: liquidate now for an uncertain payout, or stay with Cerberus and roll the dice on a new fund.
That a significant portion of investors decided to walk is a comedown for Mr. Feinberg and Cerberus, long one of the biggest and most successful private equity and hedge-fund firms and best known of late for its two failed investments in Chrysler LLC and GMAC LLC. Just a few years ago, investors clamored to get into Mr. Feinberg’s funds, as the firm benefited from a boom in hedge funds and its own strong track record.
The development also shows the difficulties hedge-fund investors have getting out of so-called illiquid assets, which often are heavily concentrated in a few companies or involve stakes in private companies and which have been hard to sell except at steep discounts during the financial crisis.
Will these withdrawals signal the end of Cerberus as a viable entity? Not necessarily so. That said, the rally in the markets does not necessarily mean that Cerberus investors will benefit. Why? The cost of liquidity can be extremely high during challenging markets. Rest assured, despite the ongoing rally in the major market averages, the markets overall remain challenged.
Just ask Stephen Feinberg and his partners at Cerberus.
LD
Getting Goldman’s Call
Posted by Larry Doyle on August 24th, 2009 7:57 AM |
Goldman Sachs remains the focus of media attention. How do these wizards of Wall Street make so much money? What goes on inside 85 Broad Street? Is everything on the up and up? Are they smarter than everybody else on Wall Street? Does Goldman have better systems?
I addressed the Goldman business model on July 6th when I wrote, “How Does Goldman Sachs Operate?” I specifically highlighted:
Goldman decided to utilize its capital and balance sheet less so for origination capabilities and much more for principal trading (that is, making bets and taking positions with its own capital). Effectively, Goldman decided to operate much more like a large multi-strategy hedge fund. Goldman took enormous risks both in their proprietary books but also in their trading activity with customers. Goldman made a concerted decision to dominate the markets in which they chose to play.
If a firm is going to take large principal risk positions both within proprietary books and customer books (trading accounts used to trade with clients), two factors are of overwelming importance: information and relationships.
Goldman worked both of these angles very, very hard. Goldman developed extremely close relationships with the largest customers in the market and the largest power brokers in Washington and around the globe.
Many of Goldman’s relationships are with very active trading hedge funds. These funds know one goal–making money. Are rules violated? I’m sure they have been.
This morning, The Wall Street Journal reports Goldman’s Trading Tips Rewards Its Biggest Clients:
Goldman Sachs Group Inc. research analyst Marc Irizarry’s published rating on mutual-fund manager Janus Capital Group Inc. was a lackluster “neutral” in early April 2008. But at an internal meeting that month, the analyst told dozens of Goldman’s traders the stock was likely to head higher, company documents show.
The next day, research-department employees at Goldman called about 50 favored clients of the big securities firm with the same tip, including hedge-fund companies Citadel Investment Group and SAC Capital Advisors, the documents indicate. Readers of Mr. Irizarry’s research didn’t find out he was bullish until his written report was issued six days later, after Janus shares had jumped 5.8%.
Every week, Goldman analysts offer stock tips at a gathering the firm calls a “trading huddle.” But few of the thousands of clients who receive Goldman’s written research reports ever hear about the recommendations.
At the meetings, Goldman analysts identify stocks they think are likely to rise or fall due to earnings announcements, the direction of the overall market or other short-term developments. Some of their recommendations differ from ratings printed in Goldman’s widely circulated research reports. Some Goldman traders who make bets with the firm’s own money attend the meetings.
Critics complain that Goldman’s distribution of the trading ideas only to its own traders and key clients hurts other customers who aren’t given the opportunity to trade on the information.
Securities laws require firms like Goldman to engage in “fair dealing with customers,” and prohibit analysts from issuing opinions that are at odds with their true beliefs about a stock. Steven Strongin, Goldman’s stock research chief, says no one gains an unfair advantage from its trading huddles, and that the short-term-trading ideas are not contrary to the longer-term stock forecasts in its written research.
Former Goldman client George Klopfer of Park City, Utah, who was unaware of the trading tips until recently, says the practice is unfair. “When I joined Goldman as a client, I got all these fancy brochures saying they put the client first,” he says. “I just don’t want to have to worry about them or big clients trading on stuff like this. I was at the end of the food chain.” He says he pulled out most of the $20 million in his account earlier this year after losing money on several Goldman funds. Goldman says individual clients like Mr. Klopfer typically have a long-term investing approach and are not focused on individual stocks.
![[Goldman's Trading Tips Reward Its Biggest Clients]](http://s.wsj.net/public/resources/images/P1-AR261A_GOLDM_NS_20090823184910.gif)
I take the following away from this WSJ commentary: (more…)
Getting the Board out of Management’s Pocket
Posted by Larry Doyle on August 26th, 2009 11:42 AM |
I strongly believe the failures in our economy are often the result of failed management. Who is charged with overseeing management? The board of directors. If management has failed, then certainly the boards have also failed.
I addressed this point in my commentary this morning, “Sarkozy Ups the Ante on Banker Compensation.” I wrote:
How have boards become so deeply entrenched with management? Is there anything that can truly be done to address this enormous problem? Continuing on this theme of the corporate governance responsibilities of boards of directors, The Wall Street Journal addresses the topic in writing, Fight Brews as Proxy Access Nears:
Why would management fight this? Control and power. New board members not aligned with current management will likely ask for increased exposure and transparency. What a novel concept.
We can always count on the heavy lobbying powers to weigh in to protect the status quo. A lot of good that has done us within our financial industry as I highlighted last March in writing, “How Wall Street Bought Washington.” The WSJ continues: (more…)
Tags: company board election process, factSet SharkWatch, Fight Brews as Proxy Access Nears, investors want access to board seats, John Finley of Simpson Thacher and Bartlett, lobbyists fighting proxy access rules, management wants control and power through board, Mary Schapiro, Mary Schapiro comments on proxy access rule, new board members will want increased exposure and transparency, proxy access rule, proxy access rule 14a-11, relationships between Wall Street boards and management, Sarkozy comments on banker pay, Wall Street boards, Wall Street management and boards
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