Don't read the commentsWe talk occasionally about the theory that BlackRock Inc. rules the world. Not BlackRock per se, exactly,[1] but there is a small group of gigantic investment managers who are the biggest shareholders in most public companies, and who, at some level, get to tell those companies what to do. The people who run those investment managers—people like Larry Fink of BlackRock—have disproportionate power over the world. If they decide that corporations should not have staggered boards, corporations will not have staggered boards. If they decided that climate change is a pressing problem and companies need to address it, companies have to at least consider addressing it. It is weird to have most of the companies in the world run by a small group of people. When you put it that way, it sounds like an obvious antitrust problem, and there is a popular argument that in fact antitrust law does or should restrict big index funds from owning all the stocks in an industry. But its weirdness goes beyond the antitrust issue, the issue of whether companies will raise prices because they all have the same owners. There are all sorts of reasons to be uncomfortable that a handful of people have somewhat accidentally accrued so much power. "I didn't know that Larry Fink had been made God," Sam Zell once said. At some level it seems like a political problem, and we have talked a few times about efforts by the actual political system (Congress, regulators) to rein in the power of the unelected heads of the giant asset managers, particularly when it comes to questions—about the environment, about guns—that are more traditionally handled by the political system. Back in 2018, John Coates of Harvard Law School wrote a paper about this stuff called "The Future of Corporate Governance Part I: The Problem of Twelve." One thing I like about this paper is the name: The issue, to Coates, is not something narrow like "do industries with more common ownership raise prices," but the much broader "what should we think about the fact that a dozen people will soon control all the companies?" Another thing I like is Coates's brief suggestion that these big funds could look to administrative law as a way to legitimate and regulate their power. ("One inspiration may be administrative law, which has to grapple with similar problems of legitimacy and accountability for agents of the state," he writes.) I once wrote about this suggestion: If an index provider decides to exclude companies with dual share classes from its indexes, or if an index fund decides to vote with management in a proxy fight, should it have some sort of public accountability process? Should it give notice and hold hearings and allow interested parties to comment? Should it create a record of its deliberations? Should courts be able to review its decisions for arbitrariness? I don't know, it seems like a hassle. But it also seems wrong to think of these institutions as purely private actors with the same modest fiduciary responsibility to their investors that any small hedge fund would have. They're a bit more than that; their size gives them power and public importance. Should it also give them more responsibilities?
That was my rough sketch of how U.S. administrative law works, of how agencies like the Securities and Exchange Commission make their decisions. They are not elected, and they do not have the same direct public accountability as a congressperson, but their processes are nonetheless designed for a certain sort of public accountability. When they make a big decision about their rules, they put out a preliminary notice of the decision and then ask interested parties, and the public, to send comments. (Sometimes with comical results.) They hold public hearings, and then, when they make the final rule, they publish a record in which they try to incorporate and respond to the public's comments. Precisely because they are not directly elected, they try to make their decisions feel legitimate by being transparent and engaging with the public's concerns. Obviously investment managers don't normally work that way, though some adjacent entities (stock exchanges, index providers) kind of do. The point here is just that if a corporation ends up accidentally having some level of systemic power like this, where its policy decisions have huge effects not just on its shareholders and customers but on the world as a whole, then perhaps it should take pains to make those decisions transparently and with public engagement. If your company somehow becomes a quasi-government, perhaps it should act quasi-governmentally. Anyway if you think that Donald Trump should or should not be allowed to use Facebook, now's your chance to tell Facebook about it. Well, not Facebook Inc., but the Facebook Supreme Court. Sorry, the Oversight Board:[2] [Yesterday] the Oversight Board accepted a case referral from Facebook to examine their decision to indefinitely suspend former US President Donald Trump's access to post content on Facebook and Instagram. Facebook has also requested policy recommendations from the Board on suspensions when the user is a political leader. Facebook's decision to suspend Mr. Trump's access to post on Facebook and Instagram on January 7, 2021, has driven intense global interest. The Oversight Board has been closely following events in the United States and Facebook's response to them, and the Board is ready to provide a thorough and independent assessment of the company's decision. A decision by the Board on this case will be binding on Facebook, and determine whether Mr. Trump's suspension from access to Facebook and Instagram for an indefinite amount of time is overturned. Facebook has committed not to restore access to its platforms unless directed by a decision of the Oversight Board. Facebook must consider any accompanying policy recommendations from the Board, and publicly respond to them.
And: Over the coming days, the case will be assigned to a five-Member case review panel in accordance with our Bylaws and Rulebook. After the panel reaches a decision, its findings are shared with the entire Board. Sign-off by a majority of the Board is required for a case decision to be issued. Members will decide whether the content involved in this case violated Facebook's Community Standards and values. They will also consider whether Facebook's removal of the content respected international human rights standards, including on freedom of expression and other human rights. Mr. Trump, through his designated page administrators, will have the ability to submit a user statement to the Board explaining why he believes Facebook's content moderation decisions should be overturned. Facebook will also share contextual information and a detailed explanation for their existing content decisions in this case. The Board will also open a process for all interested individuals and organizations to submit public comments to share any insights and perspectives with the Board that they believe will assist with making a decision.
A panel hearing and then appeal to the whole board! A decision binding on Facebook! Briefing by both sides! Public notice and comment! Facebook knows that it's a government now. It's trying to act like it. SPAC SPAC SPACI have said this before, but I cannot get over how good the recent trend to cut banks out of initial public offerings has been, for the banks. It is one of the great accidental scams of modern finance. People got mad that investment banks get big fees for taking companies public, so they said "what if we found a new way to go public, one that reduced the power of the banks?" And the banks put on trench coats and fake mustaches and went to companies and whispered "you could do a direct listing, or go public by merging with a special purpose acquisition company; that'll show those evil banks!" And then companies started doing that,[3] and the banks laughed uncontrollably and raked in so, so, so much money: The biggest investment banks recorded better-than-expected years, even though a global pandemic sent shockwaves through businesses and households. No business grew more than their operations selling stocks. In the spring, clients bracing for economic trouble turned to stock markets to raise cash. In the latter part of 2020, it was the SPACs—special-purpose acquisition vehicles—that raised billions of dollars as a quick and suddenly popular way to get more companies into the public markets' wide-open arms. The banks' fourth-quarter results provide fresh evidence of the equity-underwriting hot streak, raising hopes that SPACs may continue to boost the banks' results even as the overall economy shows signs of slowing down. … At Goldman Sachs Group Inc., which underwrote more new equity in the U.S. last year than any other bank, according to Dealogic, its equity bookrunners brought in more revenue in the fourth quarter than its famed deal makers for the first time. Goldman's equity underwriting brought in a record $1.12 billion in fees in the fourth quarter, nearly triple what it had the year before. For the year, the business took in $3.41 billion in fees, more than double 2019's $1.48 billion. (Its advisory unit brought home $3.07 billion.) … And smaller Jefferies Financial Group Inc., a big SPAC supporter, put out a quarter one analyst said was "unlike any earnings report that we have seen." It more than tripled its equity underwriting fees to $341 million. For the fiscal year, which ended in November, equity underwriting fees totaled $902 million, up from $362 million in 2019.
See, the way a SPAC works is that (1) a sponsor raises a pool of money via an initial public offering, and (2) the pool of money merges with some existing private company, taking it public. "You cut out the banks when you merge with a SPAC instead of doing an IPO," a banker in a trench coat will giggle, but of course the joke is that the banks already got a fee for taking the SPAC public. Also they might get another fee for advising the SPAC, or the company, on the merger. Also: Some said the SPAC boom helps fuel future revenue opportunities too. Newly public companies often raise additional funds quickly, and require other services the banks provide as well.
Also banks can sponsor their own SPACs, meaning that instead of the usual IPO fees of 1% to 7%, they can collect SPAC-sponsor-type fees of 20%. "Cut out the banks and go public by merging with GS Acquisition Holdings Corp II," a Goldman Sachs banker will cackle as his fake mustache slips off his lip.[4] I am kidding a little. I appreciate that most thoughtful proponents of SPACs do not actually pitch them as a way to save on underwriting fees: They are a way for a company to go public without the traditional profile of a public company (e.g. based on financial projections rather than historical financials), a way to get certainty of proceeds and speed of execution, a way to partner with a good sponsor and board. Also in many SPAC mergers, much of the money raised comes from a PIPE, a private investment in public equity by big institutions, that happens alongside the SPAC merger and with lower or no bank fees.[5] Also I am kidding about the trench coats and fake mustaches. Obviously in reality banks are marketing this pretty hard, though with occasional misgivings. And why wouldn't they? They have a product that lots of customers want. The product is new, or new to most of the customers anyway—newly popular, at least. It is at that magical early stage of financial innovation, when (1) there's a thing people want, (2) banks have it, (3) fees haven't been competed down yet, and (4) it hasn't yet led to any horrible disasters. Everyone wins! So far. Hack hack hackOof: Intel said it was the victim of a hacker who stole financially sensitive information from its corporate website on Thursday, prompting the company to release its earnings statement ahead of schedule. The US computer chipmaker believed an attacker had obtained advanced details about a strong earnings report it was due to publish after the stock market closed, said George Davis, chief financial officer. It published its formal earnings announcement upon discovering the problem, six minutes before the market closed. Intel's shares rose more than 6 per cent on Thursday, including almost 2 per cent in the final 15 minutes of trading. "An infographic was hacked off of our PR newsroom site," Mr Davis said. "We put [our earnings] out as soon as we were aware."
An infographic! Imagine being the CEO of a $250 billion company, and someone from IT comes to you and is like "sir I believe we have an infographic that has gone rogue." You've gotta be, like, "well, how good was the infographic?" Good, is the answer, unfortunately; here it is; I mean it is ugly but it's the main results page with all the good stuff (revenue, earnings per share, the quote from the chief executive officer). If that's out in the wild then you should really do something about it, and credit to Intel that they did. I feel like a lot of companies would have spent some time in denial, bargaining, etc., until the clock ran out and they released earnings normally. Especially because Intel released earnings just 12 minutes early: Intel was scheduled to report after the market closed at 4 p.m. yesterday; instead, it was forced to report at 3:48. Give or take. The quote from the Financial Times above says six minutes early—3:54—but Bloomberg's first timestamp on the news release says 3:48.[6] Also the stock seems to have started going sharply up about a minute before that. I do not mean to suggest that the Financial Times was wrong. My point is that you can only be so precise about when a piece of news becomes public. If you are a public company and you load your press release onto your website and then push a button for it to go live, and you look over at your atomic clock at the precise moment that you push the button, you will be able to record a time. A fraction of a second later, the button on your mouse or keyboard will send a signal to your computer, and then another fraction of a second later your computer will send some signals out into the world. And then those signals will, through the intermediation of further computers and wires and perhaps even human actions, arrive at various important places. Your earnings release will show up on your company's website, and on the Bloomberg terminal, and on the Securities and Exchange Commission's Edgar website, and on the Nasdaq website, and elsewhere, each at slightly different times due to differences in, like, the lengths of the wires and the complexity of the computer programs that transmit your release from your computer to those sites. And then there will be some teensy fraction of a second of delay as light travels three feet from those screens to the eyeballs of people looking at them, and then there will be a longer delay as those people think about what they are seeing and, maybe, decide to push some buttons of their own to buy or sell some Intel stock. Other people will have a more direct feed that bypasses screens and eyes: Some service will transmit the press release in machine-readable form directly to their algorithms, and the algorithms will scan them for numbers and perhaps compare those numbers to expectations, and make a quick decision to buy or sell Intel stock. And—because yesterday's news was good—all these people and algorithms will compete to be first to buy Intel stock, before all the other people and algorithms have a chance to read and digest the press release. And some will win, and will buy stock at the wrong price (say $61.50, around where it traded at 3:46 yesterday), and others will not, and will have to buy stock at the right price (say $63.50, around where it traded at 3:48[7]), and still others will lose, and will sell stock at the wrong price, because they put in a sell order a minute or a second before they noticed the surprise early press release. This is all, arguably, terrible stuff. It is good at some level that smart people devote a lot of energy and harness a lot of technology in the pursuit of making market prices more accurate. It is less obviously good that they devote all that energy to, you know, reading a press release faster than one another. They are not digging up difficult-to-acquire information to make markets more informed. The information comes from the company. It's public. Just, you know, at different speeds. People get very mad about this and propose all sorts of limits on high-speed traders to address it. But if you think this specific thing—the high-speed-trading arms race to be the first to read a press release and take advantage of other traders—is a problem, there is a very simple and almost universally adopted solution, which is: You put out your important press release after the close of trading, or (well) before the open. Then everyone has time to read it and think about it and incorporate it into their decisions before actually buying or selling any stock, and no one has to trade at the wrong price. It works great! But I suppose then you are tempting hackers to get the press release early, because they'll have whole delightful minutes when they know the earnings and no one else does. And then, when you find the hackers, you have to release the news early, and you have this whole mess. Anyway Intel's stock was going up a little before those last 15 minutes, so perhaps the hackers were buying, and were able to make some money with their haul before Intel preempted them. Perhaps not. I like to think of them sitting at their computers, discussing their hack, excitedly encouraging each other as they breached the target and found Intel's most sensitive secrets. "What'd we get?" "We hit paydirt, boys: It's an infographic." O'Hare straddleA classic way to get rich in financial markets is: - Bet that Thing X will go up.
- Simultaneously bet that Thing X will go down.
- Thing X goes up or down.
- Collect your winnings on whichever bet was right.
- Walk away from whichever bet was wrong.
There are variations. Bet that Things X, Y and Z will go up, for instance, and then walk away from whichever bets (possibly all of them) go down. Obviously the trick is to find a way to walk away from the losing bets! One notorious way to do this is with a newsletter dispensing penny-stock tips.[8] You write two versions of the newsletter saying "buy XYZ stock" and "sell XYZ stock," you send one version to 8,000 people and another version to a different 8,000 people, XYZ goes up or down, you throw away 8,000 addresses, you write two versions saying "buy QRS" and "sell QRS," you send them out to the remaining 8,000 people, etc., until there are 500 people who have seen you make five correct stock picks in a row and are impressed. Then you tell them to subscribe for more infallible stock picks for the special price of $99.95 per month. This method is good (it's bad! don't do it! it's fraud!) because you are not making the bets with your own money. Most of the time, if you make actual bets with your own money, it is hard to walk away from the losing ones. Occasionally, though, financial markets do give you that opportunity. Occasionally someone will offer a product that is like "we will give you the returns on some investment that you pick, but we'll always give you at least your money back," and you can buy two of those, pick two opposite volatile investments, collect the payoff on whichever wins and get your money back on whichever loses. Here's a story about a guy who did that with weird death-benefit variable annuities, though he went to prison for it, oops. Here is I guess a do-it-yourself version, from, of course, a Securities and Exchange Commission enforcement action announced this week: The SEC announced fraud charges against California resident Abhi Batra for allegedly conducting a free-riding scheme in which he fraudulently reversed more than $1 million in Automated Clearing House (ACH) transfers. The SEC's complaint alleges that Batra transferred money from bank accounts to brokerage accounts via ACH, then used the funds to purchase speculative options contracts. The complaint further alleges that when the options trades lost money, Batra would recall the ACH transfers to the brokerage firm by falsely representing to the bank that he had not authorized the initial transfers. As a result, Batra allegedly imposed his trading losses on the brokerage firms. By contrast, according to the complaint, when his trading was profitable, Batra kept the profits for himself. As alleged, Batra engaged in the free-riding scheme between 2016 and 2020 in brokerage accounts in his name, and in the names of six others, at times without their knowledge or consent. In total, Batra allegedly recalled more than $1 million in ACH transfers, withdrew approximately $98,000 in trading profits from the brokerage accounts, and left losses in the brokerage accounts estimated at $665,000.
Yes. Well. Obviously this is super illegal but the financial logic is sound. If you can do this, then all of your trades have the profile of (free) call options: You make money as the trade goes up, but you don't lose any as it goes down. The value of a call option increases as the volatility of the underlying position increases, so if you are going to do this you might as well buy volatile stuff, which means, of course, that you should trade options. (So you have options on options.) He did. He traded options terribly, losing way more than he won, but of course that didn't matter when he could pocket the winnings and walk away from the losses. Sometimes both at once! On or about October 16, 2019, Batra deposited $30,000 via ACH from his bank account into his brokerage account at Brokerage B. Between approximately October 17 and October 22, 2019, Batra used the $30,000 on deposit to purchase options contracts in the securities of Netflix. The options positions were closed by October 25, 2019. Batra's trading resulted in profits of more than $13,000. By the end of October 2019, Batra's account balance was approximately $43,000. On or about November 19, 2019, Batra withdrew the $43,000 ($30,000 initial deposit plus $13,000 in trading profits) from the account at Brokerage B to one of his bank accounts. On or about December 2, 2019, Batra caused his bank to recall the initial $30,000 ACH transfer to the account at Brokerage B. By recalling the $30,000, Batra was able to recoup the money that he had used to trade, while still keeping the profits from his trading.
Yeah that's just mean. What is the Harvard statistics department up to these days?Here is an impeccable article about how to win the lottery, titled "Mega Millions is up to $970 million—there's one way to up the odds of winning, according to a Harvard statistics professor." Here's the way: In fact, there is only one proven way of boosting your chances to win the lottery, according to Harvard statistics professor Dr. Mark Glickman: Your odds only improve by buying more tickets for each game, he previously told CNBC Make It.
That's a result you can find in his peer-reviewed paper with three coauthors, forthcoming in the Journal of Lottery Studies. I'm sorry. This isn't his fault. They asked him some questions, he gave them some answers. It was honestly very kind of him. I can't stop laughing: "If someone already wins the lottery, then the chance that the person wins the lottery a second time will be exactly the same as the probability they win the lottery if they had not previously won the lottery before," Glickman said. "In other words, having previously won the lottery does not improve or make less likely the chance of winning the lottery in the future."
Are those the funniest two sentences a statistician has ever spoken? I love him. I want to go back to school to get a statistics Ph.D. so he can advise me. On how to win the lottery. I will buy a million Mega Millions tickets (with research grants!) and have them bound together to form my dissertation. At my dissertation defense, my committee will ask "well did it work," and I will say "yes" and hand them each a bag full of money. Then I will have the best of both worlds, a Harvard Ph.D. and $970 million. Things happenHedge Funds' Bets on Fannie and Freddie Cause Pain. Wall Street frets as Elizabeth Warren ally takes consumer protection role. "Financial metaphors aside, perhaps the best way to think of Bitcoin is as a kind of religious movement." Third SPAC ETF Launch Taps Into Blank-Check Company Boom. r/wallstreetbets set to private after increased media coverage. Stablecoins through history — Michigan Bank Commissioners report, 1839. Jane Krakowski denies undercover romance with MyPillow CEO Mike Lindell. If you'd like to get Money Stuff in handy email form, right in your inbox, please subscribe at this link. Or you can subscribe to Money Stuff and other great Bloomberg newsletters here. Thanks! [1] Though it's sending a lot of people into the Biden administration. [2] It is tempting to write "the Facebook Oversight Board," but its actual official name seems to be just "the Oversight Board," which is far creepier. [3] I'm mostly talking about SPACs here because they are the big capital markets story of 2020 and early 2021, but as far as I can tell direct listings, though rarer, are also pretty good for banks. It is easier to imagine that not being true in the long term: Once direct listings are normalized, they really are less risky and labor-intensive for banks than IPOs, so they should bring in less money. But of course now that the hot thing is SPACs, which are hilariously lucrative for banks, banks have less to worry about from direct listings. [4] I feel like I don't mention it as much as I used to but, uh, disclosure, I used to work at Goldman, and in equity capital markets. If I were still there I'd probably be up to my elbows in weird SPACs. [5] I tend to think that the next big thing in capital markets will be a PIPE followed immediately by a direct listing: Cut out the rigmarole of a SPAC and just sell shares to big investors, then plop the shares on the exchange. Is this the same thing as a traditional IPO, where you sell shares to big investors and then let the shares open for trading the next day? Yes, but it uses different words. [6] Actually 15:48:17. Here is the news release on the Bloomberg terminal. Meanwhile Intel's filing of the earnings on a Form 8-K with the Securities and Exchange Commission is timestamped 16:04:38, four minutes after the close, though that is when the SEC "accepted" the filing, not when Intel transmitted it. [7] I mean, the stock closed at $62.46, and then opened down this morning (opening price of $58.85), so it's not like $63.50 was "the right price" in any particularly fundamental way. It was just the market price moments after people became aware of the news. It is a very local right price, a right price on the time scale of a high-frequency trader, not a long-term investor. [8] The title of this section is from a different method, the old trader joke about the "O'Hare straddle," which consists of (1) long some very risky position using someone else's money (margin, your employer's account, etc.) plus (2) long a plane ticket to a non-extradition country. If the risky position pays off, you're rich; if it doesn't, you're gone. This is of course a different payoff profile from being able to *costlessly* walk away from a losing position and come back the next day. | 
◂‹〖DownLoad〗 2020 Falling Full Movie Online released 2020. story: John Peterson lives with his partner Eric and their adopted daughter in ...
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