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Posts Tagged ‘private equity’

SEC Probe of Money Managers Should Also Include FINRA

Posted by Larry Doyle on September 13th, 2010 10:11 AM |

In reading a Bloomberg commentary this morning, I could not help but think that policy implementations the SEC would like to impose upon money managers also need to be imposed in retrospect upon its regulatory kin at the Financial Industry Regulatory Authority (FINRA).  Let’s navigate. Bloomberg writes, SEC Probes Money Managers for Conflicts in Choosing Hedge Funds:

The U.S. Securities and Exchange Commission, stepping up its oversight of investment advisers, is examining whether asset managers that channel money to hedge funds are acting in investors’ best interest.

The agency asked money managers for information about their “due diligence” in selecting alternative investments such as hedge funds, private equity and venture-capital funds, according to a letter from the SEC’s Office of Compliance Inspections and Examinations obtained by Bloomberg News.

Longtime readers of Sense on Cents are well aware that in my reading and review of FINRA’s 2007 Annual Report (embedded in this link), I asked for information and disclosures regarding FINRA’s own internal investment portfolio. (more…)

Volcker Rule Gains Support of Former Treasury Secretaries

Posted by Larry Doyle on February 22nd, 2010 3:59 PM |

Score major points for former Fed Chair Paul Volcker in his pursuit to restructure Wall Street. How so?

A letter in this morning’s Wall Street Journal from five former Treasury Secretaries endorses Volcker’s proposal to limit proprietary trading activities in our largest banks. The letter reads,

We who have served as secretary of the Treasury in both Republican and Democratic administrations write in support of the proposed legislation to prohibit certain proprietary activities of commercial banking organizations—the so-called Volcker rule, as part of needed financial reform (“It’s Time for Financial Reform Plan C,” by Alan Blinder, op-ed, Feb. 16).

The principle can be simply stated. Banks benefiting from public support by means of access to the Federal Reserve and FDIC insurance should not engage in essentially speculative activity unrelated to essential bank services. (more…)

Proprietary Trading Did Bring Down Wall Street

Posted by Larry Doyle on February 3rd, 2010 12:37 PM |

The Wall Street lobby in all its glory is fighting tooth and nail to defend its turf from the volley launched by former Fed Chair Paul Volcker. Recall that the newly designated Volcker Rule, if implemented, would disallow proprietary activities from those institutions taking consumer deposits. This implementation would effectively reinstitute the Glass-Steagall Act which was rescinded in 1999.

The proprietary activities most often highlighted by those in the banking community are investment and trading activity within private equity, hedge fund and prop trading desks. The banks are screaming that these activities should not and need not be separated from their overall operations because these activities did not cause our economic crisis. They would be correct on one hand, but how convenient that their definition of proprietary is not truly comprehensive. How so? (more…)

Treasury Seeks Unprecedented Power

Posted by Larry Doyle on March 24th, 2009 8:47 AM |

I have written at length about the problems within the banking, insurance, hedge fund, and consumer finance industries over the last 6 months. While the bulk of the media focus has been on the banking industry – and primarily the large money center banks – the erosion in asset values at these other financial companies has been accelerating.

This past Sunday evening on my weekly radio show, NQR’s Sense on Cents with Larry Doyle, I spoke extensively about the massive financial shortfall within the insurance industry. In addition, relatively early on I warned that the hedge fund industry had likely been severely mismarking many investments. From a piece I wrote on November 12, 2008:

Give it time, because hedge funds do not have to report to anybody as to what their positions are and where they have them marked. There is no doubt they have positions that are grossly mismarked and have many positions that are totally illiquid. For many investors in these funds, these are truly “roach motels.” Hedge funds will sell what is most liquid when they can to meet redemption requests. We should expect a significant number of hedge fund liquidations, consolidations, and out and out disasters.

The same can be said for a number of private equity shops. Consumer finance companies with large holdings of a variety of consumer assets are fighting for their lives as delinquencies and defaults on these assets ratchet higher. (more…)






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