Category Archives: Investment management

Michael Lewis’ Repeat Omission: No Crimes Were Committed

In Flash Boys, Michael Lewis has again launched a book that hews to his established formula: colorful outsiders take on a big bad entrenched establishment and win. Even though Lewis seems assured of having yet another best-seller, this book is getting more criticism than his works usually do. Put it this way: when commentators as diverse as Felix Salmon, Matt Levine, and Pam Martens feel compelled to object, it looks like Lewis has overfitted this tale to his blockbuster formula.

Understanding the Confidence Fairy

Why you should be skeptical when economists and policy-makers talk about the value of reducing uncertainty which is code for invoking the confidence fairy.

Los Angeles Public Pension Fund Tells Us It Is a Happy, Trusting Victim of Investment Managers

Our efforts to learn more about the private equity industry are revealing how determined public pension funds are to hiding as much as they can, even when they don’t have a legal leg to stand on.

Prominent Retiree Chides CalPERS for Repeating Conduct that Led to Past Private Equity Scandals

CalPERS retiree Tony Butka wrote a letter to CalPERS’ board describing why he is disturbed over how CalPERS is stonewalling my data request.

Tax Havens Make US and Europe Look Poorer than They Are, Exaggerate Size of “Global Imbalances”

Peculiarly, despite the importance of tax havens, a pathbreaking paper published in 2013 by Gabriel Zucman of the Paris School of Economics, The Missing Wealth of Nations: Are Europe and the U.S. Net Debtors or Net Creditors? (hat tip Dikaios Logos) has received perilous little attention. Perhaps that’s because, among other things, it undercuts the Bernanke-flattering claim that “global imbalances” were a major driver of the financial crisis.

Marshall Auerback: When is a Bubble a Bubble?

Bubbles have become a major focus of discussion in today’s financial markets. But very few people actually define what they mean when describing this financial phenomenon.

Bubble-logic and the Fed’s “To Taper or Not to Taper”

One of the amusing things right now is that there isn’t much debate in equity-land as to whether to be long or not.

401(k) Plan Abuses Finally Coming to Light

I doubt that I’m unusual in being a finance type who has heard about 401 (k) abuses and bad practices for a very long time. So it’s gratifying to see the Financial Times that something is finally being done to try to curb this behavior. But that is hardly the full extent of what is rotten in retirement fund land.

Whistleblower Describes How Private Equity Firms Flagrantly Violate SEC Broker-Dealer Requirements

Last week, Crain’s Business Daily and Fortune reported that a whistleblower has provided the SEC with evidence of massive, ongoing violations of securities laws, specifically, the Securities Exchange Act of 1934, by several unnamed private equity firms.

John Coffee on the SEC’s Bogus Enforcement Math

Coffee, a highly respected securities law professor as well as a frequent critic of regulators., he takes a hard look at the SEC’s claims that its performance has improved and finds them wanting.

Speculation About Whether the Fed Manipulates the Stock Market Becoming More Mainstream

Even during the pre-Lehman days of the financial crisis (yes, Virginia, there were three acute episodes before the Big One), blogs and professional investors in my various e-mail conversations would discuss the idea that the Fed had a “plunge protection team” which would intervene to stem market routs.

The Wall Street Code: HFT Whisteblower Haim Bodek on Algorithmic Trading

Haim Bodek is a former Goldman and UBS trader, more recently the founder of his own trading firm, who has come firmly out against how stock exchanges work with high frequency traders. Readers spoke approvingly of this recently-released short documentary about his efforts.

The UK Insolvency Service’s Oddly-Timed Carbon Scams Press Release Highlights Its Own Slow Response

A sceptical look at anti-carbon-scam enforcement activities in the UK.

David Dayen: Mysterious Study Backs Financial Adviser Thieves Who Want To Keep Bilking Small Investors

At the risk of self-promotion, allow me to point you in the direction of a piece by me running today in The New Republic. It’s about a proposed update to the Department of Labor’s fiduciary rule, and how the financial services industry, along with members of both parties, are working to stop it. An excerpt:

Why You Should Not Trust the Financials of Private Equity Owned Companies

Yesterday, we discussed how a family private equity firm Swift River, which is owned in part by Tony James, Blackstone’s head of private equity business, purchased a software company called iLevel Solutions rom Blackstone itself.

Today, we are going to examine iLevel in greater detail. We will see that this company is built from the ground up as vehicle to convince PE investors and the SEC that Blackstone and other PE firms have implemented robust financial controls over the companies they own. The reality, however, is the opposite