Private Equity in America: End of an Era!

Private Equity

Could private equity firms join reinsurance companies and mutual funds in going abroad due to increased taxes and regulations? Without a question, this could happen if Congress and the Obama Administration move forward to change the tax treatment for private equity and hedge fund income from the present 15% for capital gains to that of 35%, the top rate for income. This “carried interest” rule has come before Congress and never moved, … [Read more...]

Compensating Executives by Insider Trading? And it is Legal.

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With much spot light focused on insider trading and excessive executive compensation received at times of recession, investment programs under Rule 10b5-1 receive little attention. Investment plans under Rule 10b5-1 were established to prevent insider trading and protect the securities markets but instead have been used to enhance executive compensation.   Like options, which in theory were supposed to tie management pay to stock performance, … [Read more...]

Money Goes Where It’s Treated Best

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As the old saying goes “money goes where it's treated best.” And it is certainly true when it comes to regulating an industry. In regulating an industry, the government must treat money well in order to maintain the health of the companies under its jurisdiction. The regulation of the financial sector imposed by The Obama Administration will have tremendous negative consequences if the old proverb is not quickly learned. The negative effect … [Read more...]

Banks Find Comfort In Dodd-Frank Loopholes

Banks find comfort in Dodd-Frank

It is not surprising to find loopholes in the Dodd-Frank Act for banks.   But when loopholes allow “collateral transformation”, potential consequences are questionable. As has previously been reported, the Dodd-Frank reforms require derivative deals to be executed on a clearinghouse. This means that traders will need to post collateral while regulators will have a central place to spot risks in the market. However, it seems that … [Read more...]

CFTC Seeks Authority Over All Derivatives

As Commodity Futures Trading Commission Chairman Gary Gensler prepared for testimony to be delivered to the Senate Agriculture Committee today in Washington, he stated that customized derivatives need regulation even when they are exempt from public clearinghouses.       “Regulators would create rules to make sure that such specialized derivatives aren’t slightly modified standardized products meant to evade public reporting,” Gensler … [Read more...]