posted on Mar, 20 2009 @ 03:24 AM
This is a move of desperate people. It is one of the examples of folks being overtly political to create sound bites for themselves and is one of
the things most despicable about politicians.
I'm not sure about the legality and will trust those on the thread for their considered opinion in that regard. As someone who has spent their
entire working career in the asset management business, it in some ways is immaterial as to the legality of it, however. The damage has been
With the government doing this, even attempting to, will do a bunch of things.
1. cause more companies to list on non-US exchanges. London is already the listing capital of the world, thanks in no small part to Sarbanes/Oxley.
Even more firms will list out of the US. In a knowledge capital economy, the long term consequences of that are not good.
2. The smartest and best folks in the industry will simply move to non-US firms and receive payment in non-cash compensation that is housed of-shore.
The government may be able to get your off-shore cash, even if it is in a private bank. They will not be able to get the value of stock options
that, upon grant have $0 value and can be housed in a non-US based trust. Upon exercise, the real money comes to these folks and Uncle Sam has no
way to get their hands on that.
3. The smartest and best folks in the industry will simply move to small and private firms where they don't have to put up with this BS. This is a
trend that is already well underway and it will pick up steam in a big way.
4. Private equity firms and hedge funds will refuse to do business with other firms who are subject to this government oversight. It will rightly
be viewed as the same thing as a university who receives government research money and therefore has to conform to any number of government rules,
One other thing to consider is the fact that this is a massive violation of privacy for folks. In a public firm, only the top 5 highest paid folks
have their compensation published in corporate documents by current law. Moving the level of compensation transparency down to as low as $250, which
is mid-management in the asset management business violates privacy in a big way. Why should my neighbor, brother-in-law or some dude who's kid
plays on the same football team as my kid know what I make? It is outrageous.
Legal or not, it does not matter.
Watching the AIG chairman get grilled the other day was sickening. What these boneheads don't understand is that when you have $trillion of complex
instruments in a portfolio and you are trying to wind that portfolio down, you don't fool with the folks winding it down. They will get together
and just walk out all in the day. Those guys don't need to work another day in their life and you can only push them so far. I've worked in
firms where it has happened - whole departments jump to another firm and just don't come in, leaving the firm with $billions of positions exposed to
the market. Folks may not like the fact that these folks get paid this much money and that they can tell their firm's and the US government to stick
it, but that is the way it is.