Category Archives: Banking industry

Aguilar Proposes Transparency Fix for Broken SEC Waiver System

Since Kara Stein became a commissioner on the SEC, we’ve heard a lot about the agency’s waiver policy. Basically, if a financial institution commits a crime, the SEC has a series of automatic penalties that are “automatic” in name only, because the agency routinely waives the penalties. Stein’s outcry at this turn of events always makes people like Matt Levine, in his usual role of intentionally missing the point, completely befuddled, because the punishments wouldn’t fit the crimes, and banks would lose access to entire lines of business for some unrelated transgression, and that just wouldn’t be fair, now would it?

The point, of course, is that automatic penalties are either automatic or not. If the punishment of banning institutions from managing mutual funds or working with private companies to find investors, or forcing SEC approval for any stocks or bonds that the firm issues on its own behalf, is simply too harsh as a consequence of committing a crime, then the SEC can go ahead and eliminate the automatic trigger. But having them in place, and then routinely waiving them, makes a mockery of any sort of accountability whatsoever. I personally believe that having these penalties in place are a solid way to ensure compliance across business lines, with the only threat that matters – a threat to the pocketbook – in reserve. If it would be too costly for banks to break the law, well maybe they’ll be a little more careful. But I would rather just eliminate the penalties altogether than have the SEC bow and scrape to ensure that committing fraud doesn’t lead to anything bad happening to the perpetrator.

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Yet More Private Equity Grifting: The SEC Enables “Broken Deal Expense” Con

There’s so much chicanery afoot in private equity that I sometimes don’t write about important aspects on a timely basis. One of the big ones that most investors manage to kid themselves about is how the general partners’ fee structures really work. The widely-cherished fantasy is that the prototypical 2% annual management fee (the “2” […]

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The Decline in Market Liquidity

While the Fed isn’t worried about the fall in market liquidity, experts argue that if investors make abrupt changes in their portfolios, the lack of liquidity could produce a crisis.

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Bill Black: Republican Candidates Agree that the System is Rigged for the Rich

The Republican candidates for President all made shameless appeals for even more plutocracy, in particular preferential treatment for the rich.

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New York Department of Financial Services Slams Bank Fixer Promontory Group, Hitting it in Its Profits and Reputation

A decision by the New York State Department of Financial Services appears to be finally crimping the wings of this powerfully placed bank fixer. Promontory is being denied access to information that effectively locks it out of a large swathe of consulting work that is important to its business.

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