Sad but true - actually, the real reason is that people are so cynical that they have lost faith that things can really be done. Every attempt to make simple or to protect "us" makes merely more regulations. Every tax reform brings higher taxes on the real middle class. Every "protection" brings a CYA paragraph appended to a filing.
Arguing for months about regulations and rules which bring more layers of "forward looking statements" is not going to deter those who would steal from shareholders.
The only way for the system to change is for real leaders to take bold steps.
1. Computerize the markets and make them peer to peer ala Island. Eliminate the specialist and MM monopolies. They could still compete but would not have a monopoly any longer.
2. Insiders (and management,BOD) must announce (via filing) trades 24 hours BEFORE they sell. Periodic timed trades must be announced one year in advance with totals listed, first trade at least 7 days after filing.
3. Management must be limited to perks and packages based on 5 year performance, with 99% tax bracket for anything above a fraction of free cash flow. If no free cash flow, then nothing more than a nice low 6 figure package, adjusted for inflation. (Hey, I'll take that package and I bet I'd do a better job than at least 1/2 the CEO's).
4. No naked shorting. (OK to have shares found on delivery date as opposed to trade date but heavy fines for failure to deliver.) Make shorting a level playing field. Allow retail shorting on all shares even pennies if 100% margin is put up. No more MM naked shorting because of the end of their monopoly. May need to restrict artificial shorting via derivatives if less than 100% margin effect.
5. Allow any shareholder to bring a 10(b)(5) or similar action against analysts or those who act like analysts (issue PR's, pretend to be analysts, post on BB's), if facts are intentionally misrepresented and reasonably expected to be relied upon. SEC has no resources. Let those who get screwed tie the manipulators up in court.
6. To encourage class actions that make sense, no legal fees (other than out of pockets costs) unless recovery is at least 25% of the loss in value of shares alledgedly caused by the actions claimed in the complaint. If a class action is won by a corporation, the attorneys in the class action must reimburse the corporation for their legal fees at a rate similar to the lower of that charged by attorneys for both sides in the litigation.
7. As for the real scum in the investment world, those who would bribe others to lie, those who would lie with bribed shares, those who would extort, promote, act in concert to manipulate, allow any shareholder to bring actions that would result in triple damages and attorneys fees, as well as punitive class damages. Admittedly, an element close to scienter would have to be proven so that mere expressions of opinion do not bring liability.
Admittedly, these are perhaps pipe dreams, written with about 5 minutes of preparation. However, we need real action not accounting rules which lead to more CYA paragraphs in a filing.
I bet I could take 10 of us real investors and come up with a real plan in 100 days that would be better than what passes as the greatest free market in history, that is, if you prefer to measure greatness by fairness. |
