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SEC Begins Poking At Private Equity Asset Valuations
The WSJ is reporting that the SEC sent letters back in December to some private equity firms as part an "informal inquiry" into how the firms value their assets.
It stands to reason that the SEC will be quite interested in how private equity firms are valuing assets since the financial crisis began in 2008.
Back in June 2011 the SEC adopted a rule that requires private equity firms register with the SEC in order to "give the commission, and the public, insight into the hedge fund and other private fund managers who previously conducted their work under the radar and outside the vision of regulators." The rule was put in place to comply with a provision passed under the Dodd-Frank Act.
Firms that have not yet registered (ie: non-publicly traded companies), have until March 30th to do so.
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MARTIN ARMSTONG – THE STORY
The year is 2012: Europe is stumbling from one emergency summit to the next, America has gone crashing through the 15-trillion-dollar debt ceiling, people are taking to the streets across the world because they have realised that something has been thrown off kilter; that the banks have spiralled out of control; that governments have lost their grip on public debt.
And after eleven years off the radar, a man resurfaces in Philadelphia, a man who used a computer model and the number pi in the nineties to predict economic turning points with astounding precision: Martin Armstrong predicted the exact date of the October crash in 1987, the decline in the value of the dollar in 1986, the demise of the Japanese bull market in 1990 and the Nikkei crash in 1989. He was one of the most expensive Wall Street market analysts and was named economist of the decade and fund manager of the year in 1998.
But Martin Armstrong refused to play along with the bankers’ game and warned his customers that “the club” were manipulating currency and silver markets. He quickly made powerful enemies: New York investment bankers, hedge funds managers, Salomon Brothers, Goldman Sachs. The FBI and SEC, the US Securities and the Exchange Commission started to show interest in his computer model. In 1999 he was arrested on charges of fraud which he still disputes to this day. He was incarcerated for seven years for contempt of court. After time in solitary confinement and threats against his mother, he signed a partial confession and was sentenced to a further four years. Armstrong says he no longer fears death after everything he has experienced over the last eleven years. Give me liberty or give me death – there is no middle road. Martin Armstrong wants to leave America, the country that calls itself the land of the free, yet imprisons more of its own citizens than any other: America
http://www.martinarmstrong-movie.com/
the SEC is a porn whore, poking in the wrong, or if you have the power, place
Dear SEC:
In response to your your inquiry about how we value our assets we would like to reply that our fund owns 14 CDOs on 31 MBSs representing 321 time share units in Coral Beach, Florida. My Mother-in-Law tells me these are priceless and so I will pass that information along to you.
Sincerely,
Carlos Ponce
Chief Exalted Officer,
Coral Fund Associates, Ltd.
Boca Raton, FL
"cop on the beat" matters and is not as some would pretend "polticial theater"...especially as we witness Athens burn. i expect to see much more government forthcoming btw. it is THE MAJOR reason the equity market has recovered as well as it has...and will continue to move higher in my view. (profits mean nothing if governments can't pay their bills Wall Street. WAKE UP!) The oddity that Wall Street is two thumbs up for debt monetization should be lost on no one.....
Just because a can is full of shit does not mean you actually need to stick a stick in it and start stirring it up. This is not a good thing.
The PE guys may be having a hard time in a slow growth environment, maybe they should only pay 10% tax on their carried interest.
That's enough skin in the game, isn't it?
Hmmmm....I smell a s**tload of PIK notes about to come due.....
Your mezzanine can now be found in the basement. Thanks. - Mgmt
"It stands to reason that the SEC will be quite interested in how private equity firms are valuing assets since the financial crisis began in 2008."
It stands to reason that the SEC would investigate the massive banking fraud that triggered the financial crisis in 2008.
Yet they don't. Regulatory capture. Criminals.
OBAMA : PROSECUTE CRIMINAL WALL STREET .
Good call. and good call-name.
If we re-instated FASB 157, everybody would be equally screwed.
Equal=Fair=Justice
We're permanently screwed anyway, if we don't. Rather than wondering when the flooring is going to give way, we can pick a day. We can call it Global Canned Goods and Guns Day. I was trying to work in something about gold, but that ain't gonna work. If you try to pay for something in gold, you'll be killed on the spot.
There's a lyrical benefit, too.
The Fed and the ECB would be put out of our misery.
They'd have to frack their balance sheets to find out if there is really anything there.
the bank lends to you and me and as consequence is basically irrelevant. same is not true for PE. i would think if anyone wants to know whether their assets are in fact so it would be them.
How they value their assets? The biggest unexamined story of the past decade is that literally hundreds of ponzi schemes were created by hedge fund managers and private equity managers or people claiming to be such experts all across the country. The fraudsters deduced, understandably, that there was very little difference between actually fraudulent values and mark to model values and that with zero tranaparency required, why not build a scheme. The last 10 years in this country were the wild west of finance in the private sector, and a lot of people who consider themselves libertarian don't want to look at that. The criminality was not contained to the banks.
Tyler- Great work on the SEC Logo I must say. How about one with Pole dancing SEC Loo?
I wonder if SEC has their own XXX domain? use HPC's to stream videos on their desks.
Isn't everything done to 'probe' financial entities an "informal inquiry". The charges of fraud or misrepresentation are normally converted to an informal slap-on-the-wrist fine with no admission of wrongdoing by the financial entity.
the SEC are on a fishing mission to bully small fry
...when you consider these usless porn-surfing deviants can't even prosecute mass mortgage fraud AND mass cooked books fraud amongst the biggest frauds, sorry firms, in NY you wonder why they bother looking for more crimes to (not) prosecute
HAHAHA
Expand the SEC's incompetance.
NP. Offer the SEC jobs they can't refuse and they will go away. One fucking big revolving door and bunch of pussies.
Uhhh, not really sure what the point of this story is trying to accomplish.
1. An informal inquiry does not indicate any allegations of wrongdoing and an inquiry is not an indication of any violations of federal securities laws. While I won't argue that this matter possibly deserves to get some attention as Steve Schwarzman was one of the biggest "haters" of Mark-to-Market right after the financial crisis, it's not going to bring the PE industry to its knees.
2. The deadline that you speak of is having to register with the SEC as Financial Advisors under the Act of 1940. It has nothing to do with being a public or private firm and one of the original purposes was to try and have Fiduciary Duty standards in place at these firms.
WTF?
The SEC..... the SEC! Need I say more?
The point is that this brings them under the SEC for the first time. And uuh, wrong - they have been exempt. http://www.pwc.com/us/en/financial-services/regulatory-services/publicat...
I KNOW they have been exempt... the Private Equity side of their business has been. If you read what typed, I stated they have to register as Financial Advisors. Being regulated as an Advisor has nothing to do with a firm being public or private. Blackstone and KKR are public, Carlyle and Bain are not, they still all face the same deadline to register as Financial Advisors and, at that point, be responsible for Fiduciary Duty to their LP's.
And wrong...they have been under the SEC regulation in other parts of their businesses... Blackstone is ALREADY registered as a Financial Advisor for their business on advising on restructurings and capital raising for example. If you don't believe me, go look up the documents. Really not sure of the point of your post/story.
Fiduciary duty =/= SEC oversight of controls, compliance, and new reporting requirements. If all of this already exists, you should contact the SEC and let them know they are wasting their time.
But what's your point? Given the SEC's track record of lax enforcement of the laws it is already charged with enforcing, it seems to me the PE firms have nothing to fear by being required to register as financial advisors. The SEC is useless.
The intrawebz pr0n bucket(s) keep filling up! Lucky thing the SEC is there to help empty them...
They market them the same way BAC does.... Duh!!
I just expense everything when I buy it, therefore, my asset valuation is zero. If something accidentally turns out to be worth something when I sell it, I just use the proceeds to buy some other worthless piece of crap, so there are no surprises when things don't work out as promised.
Is that Mary Shapiro on the emblem?
What else could the blonde be sittin on?