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View Diary: SEC Panel Approves New Stock Exchange-- Only For the Rich (68 comments)

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  •  People who hide things have things to hide (6+ / 0-)

    This ruling seems designed to increase opacity for some companies and to enable the manufacture of "cookie jar" companies for the upper tier to dip into without having to be responsible to the great unwashed.

    In some ways, I could see this as inadvertently creating stock and company Ponzi schemes with a limited circulation confined to the wealthy. They can rip each other off and leave the rest of us alone. And then the people who are ripped off under this scheme will have no recourse because they are the "sophisticated" investor? Sweet.

    Is it possible that now that the 99% are drained dry and leaving the stock market, this is a way for the .30% to suck dry the .70%? Fun times!

    “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR

    by Phoebe Loosinhouse on Sun Feb 10, 2013 at 11:41:42 AM PST

    •  One thing I'd watch is how the hedge funds (4+ / 0-)
      Recommended by:
      Dartagnan, yuriwho, nchristine, doraphasia

      and professional stock shorters deal with this. I have to wonder if green alternative energy and emerging tech companies might be especially vulnerable to this.

      Predatory hedge funds are likely to see a major opportunity here, to not make money by profiting from the increase in share price, but in shorting the stock, placing big heavy bets (using various options) the price will drop within a given period. This enables them to take the money of other investors, often putting only pennies on the leveraged dollar. Very possibly this could set up the fleecing of big pension funds from state public workers and large money funds handling sizeable pension holdings on behalf of workers and corporations, as well as any government investment and seed money programs.

      If a hedge fund manages to get an early start shorting stock, and gets to stay ahead of the curve as a 'privileged investor', the hedge fund can manipulate price changes (both up and then down) which help precipitate an overall big swing in the stock price downward, post-IPO, allowing them to walk away with the other investors' money, and leave a smoking ash of what might have been a viable and innovative new company in their wake, and set them up to have whatever was truly innovative be bought out at firesale prices.

      Hedge funds have already played a big part in the failure of some fairly big institutions in the last decade or so, including investment arms of banks betting against our own American mortgages and commercial real estate loans. Allowing them even more protected status, greater opacity, will surely create a less stable market overall, and cause the meltdown of significant investments meant to stimulate and grow the economy, not drain it of whatever value is possible to siphon off by such cynical 'plays'.

      When life gives you wingnuts, make wingnut butter!

      by antirove on Sun Feb 10, 2013 at 12:05:26 PM PST

      [ Parent ]

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