Is the PE industry any more ethical than the universal banks?
Ever since Mitt Romney failed to make the economic case for private equity during the last presidential campaign, PE’s public image has been battered even further.
The deflating effects of underperformance and overregulation
Warren Buffet’s wager with Protégé Partners epitomizes the gloom hovering over the hedge fund industry. In 2008, the Oracle of Omaha bet the New York-based fund-of-funds $1 million that index funds would outperform hedge funds over the next 10 years.
Who knew what PE managers were hiding from their investors?
Are private equity documents so opaque that even sophisticated investors couldn’t possibly figure out how much PE firms actually earn (or save) from their portfolio companies?
Whoever pays wins
Ever since AAA-rated subprime mortgage-backed securities (“MBS”) collapsed during the global financial crisis, sharp attention has been focused on the business model of the US credit rating agencies.
At issue is whether those inflated MBS ratings were based simply on mistaken assumptions about US housing prices (as the agencies argue), or whether they were the product of an inherently flawed payment system.
Should the current reporting window for 5% equity stakes be closed?
Whenever a hedge fund activist like Bill Ackman, David Einhorn or Dan Loeb picks a company to attack, he quietly amasses 5% of the target’s stock and isn’t required to notify management or the marketplace of his substantial stake or mutinous intentions for 10 days.
Serious risks for an uncertain reward
In 2009, Linda Almonte, a division vice president at JPMorgan in San Antonio, TX, discovered substantial errors and omissions in the paperwork supporting almost $200 million worth of credit card judgments the bank was selling to a debt collection agency.
Reviving the ‘insurable interest doctrine’ to ban financial WMDs
You may say “What”? — but two professors at the University of Chicago’s Institute for Law & Economics are calling for new financial derivatives to be subjected to the same type of regulatory review as pharmaceuticals.