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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."
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.
The fewer public companies we have the better. Individual shareholders have no say in anything anyway thanks to institutional ownership, and it's mostly public companies that are responsible for consolidation, loss of employment, offshoring, etc.
Most privately held businesses are not large (yes, there are exceptions). Small businesses don't outsource, they don't bring in H1-B Indian wage thieves to do their tech work, they employ more people on a percentage basis, and an awful lot of them are not interested in growth at all costs all the time either.
The economy and almost all of us would be far better off with less publicly traded companies.
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.
> SEC regulations can be maddeningly vague
Many FDA regulations are *insanely* confusing. Try doing *anything* that involves human nervous systems, such as research into sensory nerves or artificial vision, and you run into incredible amounts of what one "cannot" do and no acknowledge of what one *can* do. It's even worse for anything politically sensitive, such as revolution on human/simian comparative physiology, which offends the anti-evolution lobbies in Florida, artificial hearing, which offends the sign language deaf community, or Yahoo-Wahoo forbid, anything that mentions "stem cells", whether fetal or adult stem cells, due to the scare mongering about baby harvesting by these twits http://www.usatoday.com/story/...
You would also not *believe* the regulatory schizophrenia about homeopathy and Scientology. The FDA refuses, under lots of lobbying pressure, to call them outright frauds. But it also refuses to allow them to make medical claims, so practitioners of both frauds make the claims by implication or by "personal testimonial", not by official advertising, and the FDA continues to not act against them.