In late February, Bloomberg stated that the SEC is “considering” forgiving decades of private equity firms acting as unregistered broker-dealers and possibly legalizing the practice going forward. In case you think this is not a big deal, as we explain later in the post, the SEC is in fact vigilant about enforcing these regulations, so this would be an unprecedented waiver of liability.
Wall Street firms have hit a rough patch this year. Many financial institutions are in the midst of several probes from regulating authorities and have been forced to reshuffle management due to the stringent regulations that have been placed on their operations.
December, however, brought good news for these exhausted firms. Research shows these institutions have been quite successful in retaining their junior employees in comparison to boutique investment companies.
In an earlier post, we discussed the ongoing violation of SEC broker-dealer regulations by private equity firms when they collect “transaction fees” for buying and selling companies on behalf of the funds they manage. The 1934 Exchange Act mandates that only SEC-registered broker-dealers may collect transaction-based compensation (subject only to limited exceptions which are not germane here ).
Last week, Crain’s Business Daily and Fortune reported that 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.
By Matthew Smith:Manufacturers have seen solid results this week with Whirlpool (WHR) and Boeing (BA) leading the way and possibly foreshadowing better results from other names such as United Technologies (UTX).
Something strange happened on the way to Guyana Goldfields completing its latest equity issue, a financing mandated by lenders as a condition of advancing US$185-million for its Aurora Gold Project that’s scheduled for commercial production in mid-2015.
Guyana Goldfields raised equity capital by way of a non-brokered private placement. That method stands in contrast to the conventional way where an issuer will strike a bought deal with a consortium of underwriters and pass the risk of selling the shares to the dealers.
Yves here. Steve Horn of DeSmogBlog has done important original reporting and uncovered what could be impermissible dealings between North Dakota officials and David Petraeus, in his role as emissary for one of private equity’s best-known players, KKR.
I hope readers forgive me for going a bit heavy on private equity coverage this week, but with markets complacent and Congress out of session (the House is back from recess as of today), the timing is fortuitous for pursuing this topic more intensely than usual.
ETF Database submits: Most financials have been under the microscope in recent weeks, with poor reports coming out of both Bank of America and Citigroup and Washington pushing through a plan to overhaul the existing regulatory system. These events have caused many investors to wonder about the prospects of growth at big Wall Street banks; some are now looking to other corners of the market in order to provide exposure to financials without considerable downside risk.