Displaying items by tag: regulation

Wednesday, 06 January 2021 19:10

SEC May Make Big Changes to the Muni Market

(New York)

One of the big risks to the muni sector that has gone underappreciated by the financial media and investing community is the threat of the soon-to-be revamped SEC making some big changes to the asset class. The reason for concern is that Elad Roisman has just been appointed interim chief of the SEC. Roisman has long had a focus on transparency in fixed income markets, which he and others at the SEC feel is too opaque. This has raised the risk of new regulation in the space. That said, his short term before likely being replaced by Biden will limit his time frame to change any policy.


FINSUM: Roisman is a Republican and was previously chief counsel at NYSE Euronext, which gives him a very significant command of market structure. This would certainly equip him with the know-how to overhaul fixed income markets, but unless the Biden administration wants that to be a focus, it doesn’t seem he will have enough time. Bullet dodged or opportunity missed?

Published in Bonds: Munis
Tuesday, 17 September 2019 12:06

RIAs May Be Growing Too Fast

(New York)

RIAs have been growing at breakneck speed for years. Their growth rates are pretty much the envy of everyone else in finance. But to be honest, they may in fact be growing too fast. Take for instance the case of Creative Planning, a Kansas-based RIA that has tripled its client assets to $42 bn since 2016. Alongside the tremendous growth they have also seen trouble, such as an SEC fine for improper radio advertising and another less infraction. The bigger problem for RIAs is that their own internal systems for control, compliance, and governance may be quickly overwhelmed by the growth they are seeing.


FINSUM: RIAs who are growing organically are having trouble keeping up, but the ones growing through acquisition might have even more trouble, especially with keeping costs manageable considering all the overlap.

Published in Wealth Management
Thursday, 01 August 2019 09:07

How to Profit from Tech Stock Fear

(San Francisco)

The whole market is worried about tech, and with good reason. Current government investigations into antitrust practices could harm Silicon Valley’s biggest tech companies. However, all the anxiety has created a potentially great way to profit from them—sell puts. Puts on tech companies are currently trading at a steep premium because of anxieties, but selling puts—a practice which profits when the share prices rise—can be a quite profitable at the moment.


FINSUM: We think this could be a good strategy for the next year. The likelihood of heavy tech regulation seems less under Republicans, so for the next year we think there is potentially smoother sailing for Silicon Valley. That said, regulating the industry is one of the few things both Trump and the Democrats agree on.

Published in Eq: Tech

(San Francisco)

One of the surprises in the Big tech space has been that top names have not moved as much on news of various antitrust and other probes as one might have expected. Here is why: investors just don’t think any current actions will have a material impact on business models. For instance, Facebook agreed to pay a $5 bn fine last week, but that sum is small enough that it does not change Facebook’s incentives in any way, it can just keep on doing what it has been.


FINSUM: We think this is a woefully optimistic view. Regulating Big Tech is one of the few areas of strong bipartisan agreement between Trump and the Democrats. The likelihood of it having a material impact on the sector’s business model seems high to us.

Published in Eq: Tech
Wednesday, 24 July 2019 11:01

Big Tech in Trouble as DOJ Opens Probe

(San Francisco)

There have been a lot of worries about the tech sector this year. Besides valuation, the big fear has been the threat of regulation. Well, those anxieties are proving to be correct as the Department of Justice has just officially announced that it has opened a probe to figure out whether the tech sector is smothering competition. The broad antitrust investigation did not name companies in particular, but said it would focus on “search, social media and some retail services online”.


FINSUM: This is quite a worrying development, but it is hard to say how exactly it may play out. There does seem to be popular momentum behind further regulating big tech, which means lawmakers may be more emboldened.

Published in Eq: Tech
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