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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
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.
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.
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
was a bad idea.
by TheSpoom (715771) Uncaring Linux user here. I have nothing to add to this but please continue. *munches popcorn*
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.
"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.
Maybe moving the debate from class class to more fundamental perspective will help move forward.
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
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.