Big Investors Appear Out of Thin Air

[Joanne98]

About a week ago, Bernard Arnault’s fashion empire, LVMH Moët Hennessy Louis Vuitton, surprised the French establishment by announcing that it had acquired a 17 percent stake in Hermès International. Two weeks earlier, Bill Ackman, the activist hedge fund investor, and Vornado Realty Trust, the real estate company, shocked Wall Street when they disclosed that they had acquired a nearly 27 percent stake in J.C. Penney, the mass-market retailer.

But hold on a minute: how is it possible that these corporate raiders were able to accumulate such large positions without anyone knowing?

In the United States — and in France — regulators require all investors to disclose anytime they accumulate more than a 5 percent ownership stake in a company. The rule in the United States, known as 13D, along with the Hart-Scott-Rodino Act, which requires activist investors to disclose when they invest more than about $60 million, is meant to provide the markets with a sense of transparency so that certain investors cannot just sneak up out of nowhere.

And yet, that is exactly what seems to be happening.

Mr. Ackman took advantage of a rule giving investors 10 days to disclose their position after breaking the 5 percent ownership threshold. In his case, once he passed the threshold, he and Vornado sprinted to buy up tens of millions of shares before having to show their hand.

Mr. Arnault’s approach was perhaps more insidious: he used derivatives to build up a stealth position in Hermès starting in 2008 so that he would not have to declare ownership until he was ready to pounce.

It is all legal. But the real question is, Should it be?

“Unless and until lawmakers and securities regulators in the U.S. adopt disclosure requirements in accord with what is now the global consensus toward full and fair disclosure of equity derivatives and other synthetic and nonstandard ownership and control techniques, U.S. corporations are well advised to adopt such self-help measures as are available,” Adam O. Emmerich and William Savitt, partners at Wachtell, Lipton, Rosen & Katz, wrote in a note to clients.

http://dealbook.blogs.nytimes.com/2010/11/01/sorkin-big-investors-appear-out-of-thin-air/?ref=business

[Beavker]

1. I indirectly work in the FS industry

and the scumbaggery runs rampant...like the "Mos Eisley" Cantina in Star Wars, a 'wretched hive of scum and vallainy', this time should be quoted by Ben Bernanke, instead of Ben Kenobi, in regards to Wall Street, et.al.

[jtuck004]

2. So, there are more than us than there are of them, an equation

which would make one think we could change things.

But these are smart people, with a single-minded goal of owning everything by whatever means imaginable.

People outside of this have no clue about who they should be fighting, (and I think they should be fighting this by reducing
the influence of the big investment banks - maybe an FDIC remedy), much less how.

The obvious answer is to educate a whole lot of people and get them to act.

Given the size and likelihood of that being accomplished, (short of seeing unruly mobs in the street who just want to burn the place down, and they aren't too picky about "the place"), are we lost? Is there an answer?

[Beavker]

3. Problem is, I'm a pee-on

The Guys pulling the proverbial trigger are the people really making the $$. It's not different than basically everything else in this country. Even half of the victims support the people that keep the fraud alive and well. Hey, it benefits everyone when Warren Buffet makes another Billion and is taxed less than someone with Minimum wage!

Doesn't look like it is going to change anytime soon. Not in my lifetime (I'm sub 40).

If I could get out I would. It would put my family in a tough spot at this time. I have a toddler that depends on me, and now, on the Tea Baggers that don't give a shit about him.

[jtuck004]

4. Oh hell, we are all mostly pee-ons today.

One step away from soylent-green.

Why leave? You aren't the problem. Our opponents are more concentrated than that - as you said, the big $$$.

The real question is the best way to fight. We could take down the building, but they would just put it up again. There are so many people friendly to them in the government that regulation is quite likely to remain a shadow of what it should be.

The most productive thing I can think of to do is work toward alternative energy, computer, and transportation projects with a focus on employee-owned business. That is the only way the workers can really control the resources, and it has the bonus of a limited role or no role played by the big investment banks.