Institutional Investors Shifting To Index Funds

In an article titled: "Active Managers Get Cold Shoulder," Craig Karmin writes in Monday's Wall Street Journal that big institutional managers are increasingly shifting to index funds.

It quotes a director of the $9 billion Illinois State Board of Investment as saying that "active managers have not given us the added performance in a down market that we hoped for."

You can read the story here.

SEC Investigating Dark Pools

In an interesting story from the Financial Times, the Securities and Exchange Commission is reportedly looking into so-called "dark pools." In an interview with Mary Schapiro, the SEC's chairwoman, the paper is reporting that the trading systems set up for large investors to block trade with little outside transparency is a source of real concern for U.S. regulators.

You can read the story here.

Hedge Funds Redux?

In a look at the growth in exchange-traded funds using hedging strategies, MarketWatch's

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The Obama administration yesterday (Wednesday) continued its assault on highly paid Wall Street executives, announcing plans to appoint a “pay czar” to oversee compensation at financial firms receiving Troubled Asset Relief Program (TARP) funds.

The government also will create a new program to give shareholders at nonparticipating firms a vote on executive pay packages.

President Barack Obama has targeted executive pay practices as part of a larger effort to overhaul regulations and prevent a repeat of the worst financial crisis since the Great Depression.

Obama will unveil a “series of specific proposals” on June 17 designed to streamline and reorganize regulations, White House spokesman Robert Gibbs told Bloomberg News.

The administration originally proposed regulations in early February to put a $500,000 per year lid on the salaries of executives at firms that tapped into the government’s $700 billion TARP rescue fund. The only exceptions would be in the form of restricted

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The Obama administration yesterday (Wednesday) continued its assault on highly paid Wall Street executives, announcing plans to appoint a “pay czar” to oversee compensation at financial firms receiving Troubled Asset Relief Program (TARP) funds.

The government also will create a new program to give shareholders at nonparticipating firms a vote on executive pay packages.

President Barack Obama has targeted executive pay practices as part of a larger effort to overhaul regulations and prevent a repeat of the worst financial crisis since the Great Depression.

Obama will unveil a “series of specific proposals” on June 17 designed to streamline and reorganize regulations, White House spokesman Robert Gibbs told Bloomberg News.

The administration originally proposed regulations in early February to put a $500,000 per year lid on the salaries of executives at firms that tapped into the government’s $700 billion TARP rescue fund. The only exceptions would be in the form of restricted

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It’s become clear throughout the past five years that GAAP and financial reporting in the United States is on a clear path toward change in the form of a convergence with the International Financial Reporting Standards (IFRS).  World events, most notably the London G-20 Summit, have been calling for a single, high quality set of accounting standards that all companies will use to file.  The SEC has recently made definitive steps toward this change, enough to make me believe that IFRS will be here before we know it, so it’s time to get ready.

Background

Since 2005, the convergence to IFRS was apparent with the European Union requiring companies listed on the EU regulated stock exchanges to file consolidated statements using IFRS.  The SEC responded to this in 2007, agreeing to accept these IFRS statements from the foreign issuers without forcing reconciliation to GAAP.  This proved the SEC’s acceptance and belief

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The U.S. Securities and Exchange Commission proposed two new rules on Wednesday that would give shareholders more say in the matter of director elections at the biggest firms in the country.

The development comes after investor complaints regarding executive compensation at large corporations, especially American International Group (AIG), leading the SEC to consider an overhaul of its policies to empower investors in choosing directors for public companies.

"This day has been a long time coming," SEC Chairman Mary Schapiro said. "The time has come to resolve this debate."

SEC commissioners split along party lines and voted 3-2 to seek public comment on the proposal of shareholder rights in companies with market values exceeding $700 million. Investors owning at least a 1% stake in these companies will now be allowed to nominate up to a quarter of the company's board of directors in corporate proxy statements.

Billionaire investors

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Reportedly, Bill O’Reilly referred to a recent story out of our nation’s capital as “bigger than Watergate.” Whether the story is bigger than Watergate or not, it is definitely a scandal of huge proportions.

To sum it up, on April 23, 2009, New York Attorney General Andrew Cuomo sent a letter to Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs Chris Dodd; Chairman of the House Financial Services Committee Barney Frank; SEC Chairwoman Mary Schapiro; and Chairwoman of the Congressional Oversight Panel Elizabeth Warren. The letter outlined how former Treasury Secretary Paulson and Fed Chairman Ben Bernanke forced Bank of America’s acquisition of Merrill Lynch – even though Bank of America CEO Ken Lewis and the board of directors tried to pull the plug on the deal after it turned out that Merrill Lynch was far deeper in debt than it had admitted. In the words of

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Bernanke Sees Late-09 Turnaround; Canadian Dollar Hits Six-Month High; Kraft Beats 1Q Estimates; South Africa Unemployment Hits 23.5%; Service Sector Gains Ground; AIG’s First Quarter Loss Expected to Shrink; Some Traders Oppose Up-Tick Rule; Chile’s Peso Rallies to 7-Month High Against Dollar

U.S. Federal Reserve Chairman Ben Bernanke said the U.S. economy will begin to “turn up later this year,” contingent upon the financial sector’s continued improvement, Reuters reported. Speaking to a congressional committee, Bernanke said the housing market may be bottoming out and pointed to improving consumer spending. The Canadian dollar hit its highest point since November. “The market is now willing to embrace risk and move clean of the safety associated with the U.S. dollar,” Stewart ...

Notes from the Investment Underground Monday, April 27, 2009 Palermo Viejo, Buenos Aires, Argentina

Welcome to Sopranos USA… Can the “junk-stock” rally last? Credit to get worse before it gets better… Feds’ “hair of the dog” recovery plan… Shockwave coming… Jim Rogers on why he’s not buying stocks… Introducing your new Notes tax expert, Raife Neuman… And more!

*** What kind of men have we entrusted to manage our economy? And whose interests do they serve? Get the answer to either of these questions wrong and you’re in for a rough ride as an investor.

*** Consider the facts surrounding the Bank of America’s takeover of Merrill Lynch.

Thanks to New York Attorney General Andrew Cuomo, we know that former Treasury secretary Hank “The Hammer” Paulson and Fed chief Benny “Two Fingers” Bernanke violated U.S. securities law by keeping the huge losses sustained by

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Geithner Calls For Regulatory Reform; Fed President Sees 2009 Rebound; Bank of China Posts 59% 4Q Profit Drop; Goldman Plans to Repay TARP money quickly; U.K. Inflation up 3.2% in February; Major Exchanges Want New Curbs on Short-Selling; Lloyd’s Says Insurance Rates to Rise; Copper Prices Take Breather After Rising 30% on China Demand; Mexico’s Inflation Holds Up Rate Cut

Treasury Secretary Timothy Geithner said the U.S. regulatory system must impose constraints on companies using risky strategies that could cause them to collapse, posing danger to the financial system. In prepared testimony for the House Financial Services Committee, Geithner said rules must be in place to keep companies from causing “grave damage” to the economy, citing the failure to rein in excesses at American International Group Inc. (AIG) and other companies. Chicago Federal Reserve President ...

More news of regulators meddling with the market again. First, the uptick rule:br /br /blockquoteThe U.S. Securities and Exchange Commission may act as early as next month to consider a proposal to reinstate the uptick rule, a source familiar with the matter said on Tuesday.span id="midArticle_byline"/spanspan id="midArticle_0"/span p Earlier on Tuesday, Democratic Rep Barney Frank, the chairman of the influential House Financial Services Committee, told reporters he was hopeful that the uptick rule would soon be reimposed./pspan id="midArticle_1"/span New SEC Chairman Mary Schapiro has previously said the agency would consider whether to reinstitute the uptick rule, which forces short sellers to sell at a price higher than the previous trade./blockquotebr /br /Then, mark to market. For now, they're saying no change, but I wouldn't be surprised if something happens. Although if we made it ...