Levine on Wall Street: The Art of Corporate Engineering
John C Malone is having fun.
Liberty Media Corporation is a series of corporate-engineering art projects curated by John C. Malone; also I guess it runs some cable television stations or something. Liberty owns 52 percent of Sirius XM, the satellite radio company, and its latest exhibit is announcing that it wants to acquire the rest in exchange for Liberty Media stock. But which Liberty Media stock, you ask: the Series A or the Series B? (Because of course Liberty has two classes of stock, which is down a bit from when it had a bunch of classes of tracking stock.) Neither, cackles Malone maniacally: the Series C! There is no Series C. Liberty is going to create a new Series C non-voting stock, distribute two shares of it for each existing share, and then use it to pay for Sirius. Why? To expand the frontiers of human perception would be my guess. Anyway I'm sure that there's a lot of other wonderful stuff going on in this proposal and that Sirius's special committee will have a grand old time evaluating it.
British insider trading enforcement is sort of awful.
If regulators haul three guys off in handcuffs and cause the collapse of a hundred-million-dollar business, and then drop the investigation ten months later because it all turned out to be a misunderstanding, that's what you'd normally call bad. But you're not the U.K. Financial Conduct Authority, which is pretty pretty pleased with its strategy of randomly arresting innocent people:
Margaret Cole, a top agency enforcement official from 2005 to 2012, says high-profile raids and arrests are a key component of the strategy—even if they don't yield convictions. "A large part of the deterrent effect comes from the regulator doing this, and you don't know when they might pop up and do it again," she says.
The key to effective enforcement appears to be just randomness. Arrest anyone you like for insider trading! Maybe they did it, maybe they didn't, maybe they've never traded anything in their life, that's not the point. The point is, if you keep popping up arresting people, something's bound to go right sometime.
Surprise! There's a European Volcker Rule.
The latest draft of the European Commission's Liikanen proposals to ring-fence trading operations from bank lending is apparently fairly benign -- " the separation is no longer mandatory, would be less costly and restrictive than first envisaged and national supervisors are given wide discretion in applying the reforms" -- but there is also a brand-new "narrowly defined" version of the Volcker Rule, which would outlaw some proprietary trading even from the ring-fenced trading operations. That seems like a misstep: If your ring-fencing actually makes your vanilla-banking depository institution safe from evil trading, why do you care how evil the trading is? Wouldn't it be better to have two regimes -- a European system where banks have to ring-fence their trading but can do whatever trading makes sense, and an American system where banks can still trade but can only do the right kind of trading -- and see which works out better?
There's going to be a Winklevoss hedge fund.
It's called Briarwood Chase Management LLC because why not, and also because "Hukkster, Inc.," is already taken. By another Winklevoss project.
Psychopaths make bad investors.
This column by David Oakley of the Financial Times begins with the sentence "If you are reading this column, there is a relatively high chance you are a psychopath," and I don't even want to think about what reading this linkwrap says about you. Great things probably. Anyway Oakley goes on to give a bunch of good fund managers the psychopath test and find that all of them have "an ability to admit mistakes, a trait alien to a psychopath," so congrats successful fund managers, you are probably not psychopaths and can continue to joke (?) that bankers probably are.
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Matthew S Levine at email@example.com