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Tech Billionaire Mark Cuban Argues Stock Regulators Hurt the Economy (sfgate.com)
Tech entrepreneur and investor Mark Cuban denounced America's stock-regulating agency on CNBC this week, arguing that they're reducing the number of companies going public with vague rules that are open-ended. "[W]here there's no clarity and no certainty on what to do in response to the SEC, you get people doing nothing or people avoiding going public or doing anything to avoid dealing with the SEC," Cuban said on CNBC. "And that's a real problem for up and coming companies and it's a problem for the economy as well."
Mary Jo White, the head of America's SEC, had appeared earlier in the week near Silicon Valley, according to Bloomberg, telling an audience at Stanford Law school to be wary of billion-dollar valuation IPOs and warning that founders and startup advisors preparing for an IPO should watch their internal controls, reporting and certifications. "They are doing what the SEC always does," Cuban complained on CNBC. "100 degrees of gray."
Mary Jo White, the head of America's SEC, had appeared earlier in the week near Silicon Valley, according to Bloomberg, telling an audience at Stanford Law school to be wary of billion-dollar valuation IPOs and warning that founders and startup advisors preparing for an IPO should watch their internal controls, reporting and certifications. "They are doing what the SEC always does," Cuban complained on CNBC. "100 degrees of gray."
If you're an honest business, you will see many regulations as an absolute hassle and cost. For every Enron there's a hundred relatively honest book-keepers who think the SOX laws as an unnecessary giant pain in the ass. Unfortunately they're needed to keep the market as a whole to function well, just like you need everything from health inspections for restaurants to safety inspections for construction workers. We know many would care anyway, but we also know some don't.
Live today, because you never know what tomorrow brings
And all the junk ipo's and stocks of the time. Going ipo back then was a way to cash out on junk companies by suckering the idiot peons into giving up their money Just like gambling
You got a dead cat in there or what?
They are getting in the way of the good old American tradition of claim salting, but he doesn't understand that without them the good old American tradition of tarring, feathering or stringing up from the nearest tree becomes a viable solution to claim salters and other financial tricksters.
Sounds like pretty sound advice to me.
And Mark Cuban is a well-known douchebag who got lucky once and has been eating out on his good fortune ever since. And, he's one of the worst sports owners in the United States.
http://bustedcoverage.com/2009...
You are welcome on my lawn.
The problem with today's stock market is that you don't make money off of investing (committing resources in expectation of *long term* gain). Most people in the market are making their money off of high frequency trading or day trading. They could care less how a stock will perform over the next week, month or year. They're looking at potential gains that moment.
And there's nothing fundamentally wrong with that approach but that's not "investing". That's pure trading and it's very hard for companies to do business when they know their stock valuation (and hence access to capital) has nothing to with their long term plans but is driven by whichever way the wind is blowing that day.
How to fix it? Exchanges make trading fees based off of period of investment. If your in it for one day, they take a 50% cut of profits. One year, 25%. 2+ years 5%. etc. However, they won't because currently the make money per trade so they want people trading like mad instead of investing for the long haul.
No. Stating the obvious just gets you moded down here :)
Seems like there's a lot of conflicts of interest, kinda like Eric Holder: Mary Jo White, current head of the SEC
Just because she's very good at defending financial sector firms doesn't mean she's a wise choice for regulating them. The regulatory agency heads are in federal service only briefly, taking large pay cuts to get into the position in order to make connections and understand how the government operates, before they go back to their industry.
He has no financial background, no legal background, and was only just barely cleared of insider trading charges and still has questionable ethics. His fame now comes from the culture derived from fraudster hatred of regulatory actions. There are few more biased and irrational sources for commentary on the topic of regulation.
Believe it or not, but his definition of "hurt economy" may not be same as yours. Suppose some regulation cuts down 10 billion from top billionaires (2% reduction in top 0.1% people) and increases by 5 billion for bottom 20% (> 10% increase), would you call it improvement or hurting economy? It has increased 5 times more income for 200 times more people but in absolute term, it has reduced total economy. People like Mark count hurting economy by checking if they (billionaires) benefits or not. Without the regulations, I would put all my money in CD and real estate. Even now, investing in anything other than index fund is not for normal people, but without regulations, even that won't work.
If you prefer some other country's regulatory regime, incorporate there, give the shares of the company to that corporation, and IPO it. You don't HAVE to be under SEC jurisdiction.
-- Support a free market in the field of government
...He's a "Stock Market Billionaire". He made his fortune by buying puts on a large number of (grossly-overpriced) Yahoo shares that clueless Yahoo 'executives' gave him in exchange for his (vastly-overrated) company "broadcast.com".
was a bad idea.
by TheSpoom (715771) Uncaring Linux user here. I have nothing to add to this but please continue. *munches popcorn*
I bet Cuban was early investor on many tech companies and wants to cash out before people realize companies without profit aren't worth anything. Spotify is prime example of a company who hasn't gone IPO yet. They lose money but with $1.5 billion in the bank they can stay the course for years.
That's exactly it. Over 90% of millionaires in America are retirees who made less than $100,000, invested about 15% of what they made, and are now self-sufficient because while they were "little guys", they were also owners of big businesses.
I was earning $50,000 and investing 10%, becoming an owner (stockholder) in Google and dozens of other companies. Public companies are THE major way that the "little guy" can get ahead and have the same advantageous that owners of big companies have - because investors ARE owners of businesses.
Billionaire investor complains that the government doesn't operate like he does! "Why, when I want to make a decision, I just do it, you know? And I can do it for any reason, or even no reason at all. Why doesn't government work like this?"
The role of the SEC is not to be a friendly, compliant, confidante and buddy. They are like auditors, they hold you to an independent standard. You are supposed to be a little uncomfortable when they are around. And minimizing your contact with them isn't a bad thing so long as you aren't actively hiding known illegal behaviour.
Cuban's suggesting that companies holding off on going public hurts the economy is a stretch. While in decades past going public was a major sign of maturity for a company, this has changed. Many major companies are actively going private now. There are no prominent economists, investors, or business commentators I know of that now believe that staying private or going private is, by itself, a sign of weakness or problems. Or if they do believe that they are keeping their opinion to themselves.
Bu-dum-dum tsh-tsh
Because "1.75 radians of grey" makes people go "huh?"
You have to talk about the specific regulation or you are just talking out your ass. Any capitalism system will need tons of regulations to work, that's a well proven and long standing rule, even if many would prefer to ignore that reality. Capitalists models always have major greed issues that manifest in too much consolidation of wealth and power if you don't actively stop them. Supply and demand provides only a basic framework. The invisible hand of the consumer regulates the market through choice, ideally an informed choice. To a large degree wealth determines choice. The choices we can make as individuals and even the choices we allow others, such as our employees.
When too much wealth is consolidated, obviously choice is consolidated as well. Once that consolidation of wealth and thus power get to a terminal point, the choices we make as individuals on a county and state level become less and less powerful in relation to the mega corporations. Many of these corporations are fairly immune to common boycotts because their revenue streams are just to diverse. They can take their time an absorb loses while coming up with a strategy that works for them instead of bowing to the pressure of consumers. Corporations often find ways to dodge consumers demands or provide just the bare minimum of consumer demands as a general business model they have no incentive to push forward as long as they are already making acceptable profits and we really do see this in products all the time. US car companies are well known for basically getting fat and lazy and letting Japanese car markers blow by them in the 70s and 80s and 90s. In a global market like the automobile market EVENTUALLY the market will correct those issues, but not without great loses and efficiencies during transitions. In other markets, like the medical industry or the power industry, there is no real global competition to keep them in check and there isn't going to be because they are regional services. You can't really make a portable hospital business or powerplant. They are tailored to the area and the costs of setting them up are enormous. This is generally where capitalism fails the hardest.
In these highly necessary areas that take huge startup costs and are tied to regional demand and laws have almost no competition and capitalism simply does not work competition. Yet there is no model where you're going to be build a power plant next to another power plant just for the sake of healthy competition. Nor would you do the same with a hospital.
So, clearly we need lots of regulation and we need that regulation to be smart. Stocks are not somehow magically immune to the need of regulations and history proves we need to stick with some reasonble stock, commodities and money market regulations or the greedy little bastards will extend themselves out 40:1 or more and when they fail they just wash their hands of it and pass that debt on to hundreds of millions of taxpayers, most of which made little to no money out of the deal but will get to pay for it.
That's forced redistribution of wealth from the 1% to the 99%... and when the 99% wants health care the 1% don't want to see their high profit margins drop so they spend billions to stop it, but in the end that's not progress and the global economy pushes on. China pulls away from the US because the rich are basically too scared to invest into their own country and people anymore.
That's really what's wrong with America. The wealthy are hoarding too much money and moving it overseas creating huge trade deficits. Most of that money could stay in America or at least North America. Stock markets, banking, commodities, whatever the hell the credit default swap market is.. that all WAY more regulation, not less.
The stock market isn't even that smart of a model for startup funding anymore, so maybe Mark needs to modernize his understanding of how the future of the economies of the world are going to work. The stock market, as it is today, is certainly outdated and really just extremely
Read TFS ... The SEC has no standards that they hold you to. They make shit up, after the fact. The contrast to the FDA is a good one. The FDA has very, very detailed regulations and sticks to them. The IRS will give you a legal opinion when queried, and is legally bound to stick to it. The FAA will stick to the plan once they burn all of your engineering money negotiating it. However, the SEC will are shit up and fine you for doing exactly what they told you to do the last time they audited you.
"How insulting can I be to someone in a bar without getting a fist in my face?"
"Well, I can offer you advice, but you can't count on it if you make trouble"
"Yes, but that's too vague. I want exact rules!"
"That's not how it works, and trying to get right up to some limit is just asking for trouble"
For every problem, there is at least one solution that is simple, neat, and wrong.
Look up the word investors in the dictionary moron. An investor is someone who participates with money in a venture in order to share from the future profits, but also bear the liabilities. An investor is selfless and in for the long run, not for the next quarter.
The stock market is not an economy, it is just a Monopoly game. It does not create real, overall wealth.
If the government was forced to pay all the legal and accounting costs of their regulations, everyone would be able to access the capital markets, not just the rich. The government would learn to save money by rationalizing the laws, only retaining those that were actually necessary.
Maybe moving the debate from class class to more fundamental perspective will help move forward.
You fools weren't content to just send your jobs overseas... but now you send IPO's and entire companies overseas too.
No one has to list in the US - both US and non-US can list elsewhere. Also entire companies can pick up and leave the US. And US investors aren't limited to US markets.
Consider the largest luggage brand Samsonite (which owns many other brands too) - founded in Denver, Colorado in 1910, now incorporated in Luxembourg and listed on the Hong Kong stock exchange. The whole company simply picked up and left.
You did this. By you supporting things like Sarbanes-Oxley (and it's many predecessors) thinking you were going to stick it to business by making them live in an economic police state where on top of the myriad reporting requirements and compliance costs, it is unknowable in advance if they are breaking the law because the vague laws' interpretation are at the whims of government functionaries.
Whenever I hear an investor crying about regulation killing jobs I want to smack them. The lack of regulation is what led to the recent collapse, much worse than any "regulation" has ever done.
Time makes more converts than reason
Spoke by someone who has no idea what SOX does.
Time makes more converts than reason
I've got mine now you can't have yours.
Typical liberal elite.
Sorry, but with the limited liability laws for corporations and the bankruptcy laws, the only risk an investor is bearing is a possible loss of their initial investment. Society as a whole bears the risk of liabilities, in exchange for the potential economic benefits of increased risk taking.