europa news revamp July 7, 2008
Posted by Bradley in : Uncategorized , comments closedThe europa website has been revamped so it is harder to find the last few days’ news releases than it used to be. Rapid is still available, although I can’t find a link from the press front page which seems only to be concerned with providing access to the current day’s news releases, although there are links to press packs on current issues such as the Lisbon Treaty. Unfortunately, the press packs aren’t very informative – there’s nothing about Lech Kaczynski’s suggestion that there was no point in Poland signing the treaty after the Irish referendum, for example.
[Tues. 8th July: the press release page now shows releases from today and yesterday – presumably in 7 days we’ll be back to the good old days of being able to see a week’s worth of press releases.]
richard bartle on the uselessness of securities law July 3, 2008
Posted by Bradley in : Uncategorized , comments closedWeird concept, I know, but this post provides some anecdotal support for the proposition that people just don’t read all those disclosures.
indexed annuities July 2, 2008
Posted by Bradley in : Uncategorized , comments closedThe SEC’s proposals on indexed annuities hit the Federal Register yesterday. The SEC states:
The federal interest in providing investors with disclosure, antifraud, and sales practice protections arises when individuals are offered indexed annuities that expose them to securities investment risk. Individuals who purchase such indexed annuities assume many of the same risks and rewards that investors assume when investing their money in mutual funds, variable annuities, and other securities. However, a fundamental difference between these securities and indexed annuities is that—with few exceptions— indexed annuities historically have not been registered as securities. As a result, most purchasers of indexed annuities have not received the benefits of federally mandated disclosure and sales practice protections.
The SEC says that it wants to create greater certainty as to the distinction between products which should be treated as securities and products which should not be so treated, focusing on the question of whether the purchaser “obtains an instrument that, by its very terms, depends on market volatility and risk.” In line with this concern for certainty, the proposed rules are only to apply prospectively. Moreover, insurance companies which issue annuities subject to Securities Act disclosure requirements (and which are not traded) will be exempt from Exchange Act reporting requirements because they are regulated under state law.
(more…)
fictional detectives and music July 2, 2008
Posted by Bradley in : Uncategorized , comments closedI noticed, reading Val McDermid‘s The Torment of Others the other day, that Carol Jordan chooses to play Arvo Pärt’s beautiful fűr Alina. For British writers of crime novels music is sometimes critical as a background, or for the characters, and for communicating information about the characters (e.g. Ian Rankin‘s John Rebus).
Here’s Pärt playing and discussing the music:
sec, risk determinations, and credit ratings July 1, 2008
Posted by Bradley in : Uncategorized , comments closedThe SEC has now published the details of three sets of proposals relating to the use of credit ratings (here, here, and here), saying:
The proposed amendments are designed to address concerns that the reference to NRSRO ratings in Commission rules may have contributed to an undue reliance on NRSRO ratings by market participants.
These proposals supplement earlier proposals for “reducing conflicts of interest in the credit rating process, fostering competition and comparability among credit rating agencies, and increasing transparency of the credit rating process” and improving investors’ understanding of credit ratings. A number of the proposed changes involve making it clear that the burden for making credit risk determinations falls on Boards (although they may choose to rely on ratings from credit rating agencies (NRSROs)). Investment advisers would also be required to make their own determinations of credit risk and would be prohibited from relying exclusively on ratings. Other proposals relate to securities issuance. For example, the SEC proposes to limit short form shelf registration for asset backed securities so that only issues to large sophisticated and experienced investors would be eligible. Brokers will no longer be required to inform customers that a security is unrated:
in proposing to no longer require broker-dealers to include in transaction confirmations the information that a debt security is unrated, we do not mean to suggest that information about an issuer’s creditworthiness is not a relevant subject for discussion and consideration prior to purchasing a debt security. We would encourage investors to seek to understand all of the risks of securities, including credit-related risks, before buying. In addition, we note that deleting this requirement would not prevent broker-dealers from voluntarily continuing to include this information in transaction confirmations.
In its discussions of these proposals the SEC is very focused on the problem that including ratings in its rules involves putting the Commission’s seal of approval on the ratings. But by recognising certain entities as NRSROs, surely there is something of a seal of approval anyway? The SEC doesn’t do merit reviews of securities offerings, but the decision whether or not to register a rating agency as n NRSRO (or an exchange, or a broker dealer) is a merit review process. Under the Credit Rating Agency Reform Act of 2006 the SEC is to register an NRSRO “unless the Commission finds (in which case the Commission shall deny such registration) that— ‘‘(I) the applicant does not have adequate financial and managerial resources to consistently produce credit ratings with integrity…” And it is a bit odd (not to say backwards) that at a time when NRSROs were less regulated they benefited from this imprimatur, but as they are being subjected to ostensibly more stringent regulation (there’s some debate on this point) they don’t.