tag:blogger.com,1999:blog-7905515.post662944140132894831..comments2024-03-14T11:09:32.759-05:00Comments on Falkenblog: Hedge Fund Disclosure Rules Favors Hedge FundsEric Falkensteinhttp://www.blogger.com/profile/07243687157322033496noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-7905515.post-63834126327873207002010-08-26T22:13:16.822-05:002010-08-26T22:13:16.822-05:00michael: I'd agree there's a value to maki...michael: I'd agree there's a value to making people accountable for misrepresentation, but as funds can't talk about their returns at all, I don't see how this helps anyone except hedge funds. After all, the crappy funds love this rule.Eric Falkensteinhttps://www.blogger.com/profile/07243687157322033496noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-51613473577684075682010-08-26T21:28:42.966-05:002010-08-26T21:28:42.966-05:00You have to understand the history of the disclosu...You have to understand the history of the disclosure regulations, the due diligence defence, and the growth of the secondary market for securities.<br /><br />The secondary market for securities would not exist unless the reseller of a security is not liable for the issuer's misrepresentations to the public. <br /><br />The legal solution to this was to give the reseller a due diligence defence - which required some public disclosure so that there was evidence of the due diligence.<br /><br />As long as the broker/dealer did the required due diligence, then they were not liable for whatever they failed to turn up, even if it was material to the public.<br /><br />But there were exemptions to this: a broker/dealer could sell to a "sophisticated party", if the person was the sort that the regulator thought could and ought to perform his/her own pre-purchase investigation. In exchange for this exemption, the broker/dealer agrees to say nothing "to create a public market" for the product.<br /><br />It would be easy to review these exemptions, find that there is no rational basis for them, and get rid of them.<br /><br />But, exemptions to the public disclosure rules are what create the need for hedge funds, so they are going lobby anytime soon for the ability to "create a public market" for their products.michael websterhttp://www.franchise-info.canoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-40826691723334262912010-08-26T18:22:12.424-05:002010-08-26T18:22:12.424-05:00She's just acting on incentives - the more the...She's just acting on incentives - the more the SEC screws up, the more money it gets.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-87515426784649285922010-08-26T14:19:13.655-05:002010-08-26T14:19:13.655-05:00I agree that hedge fund disclosure restrictions ar...I agree that hedge fund disclosure restrictions are silly, and not in investor interest. However, I don't think Joe Kennedy had anything to do with bucket shops, and there is nothing wrong with bucket shops. The anti-bucket shop publicity (including silly disgusting stories about the etymology of the name) was spread by their competitors--exchanges--aided by newspapers which derived a lot of business from price listing and advertising.<br /><br />From 1919 to 1930, Joe Kennedy engaged in stock manipulation, fraud and insider trading. Although that is often described as "legal at the time," it wasn't. There were no specific statutes against it, but it could have been prosecuted under general fraud and conversion principles. No one did that, however.<br /><br />That activity was not how Joe Kennedy made his first fortune, he did that through business, not finance. It's also not how he made his main fortune, which was from buying real estate during the Depression. Wall Street got Joe from $25 million to $50 million, the real estate brought him up to $200 million (multiply by 10 or 15 for approximate current values).Aaronhttp://www.eRaider.comnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-29130287176321407782010-08-26T13:43:11.958-05:002010-08-26T13:43:11.958-05:00Its no wonder we see such little innovation in fin...Its no wonder we see such little innovation in financial markets. just higher and higher regulatory barriers to entry.Paulnoreply@blogger.com