Tax honesty on Carried Interest for 'Private' Equity

Managers of 'Private' Equity funds effectively manage money from Joe Public. There is nothing private to it - except the level of secrecy surrounding performance, fees and the compensation of the managers and the executives of the portfolio companies. Sometimes these people invest in funds or portfolio companies - but even if they do it tends to be on terms that favor them, i.e. they amount of money they put in is disproportionately small compared with the terms the public receives. So treating carried interest as a capital gain is to a large extent nothing but the abuse of a tax loophole by the insiders at the expense of the investing public. In addition, many funds - especially international ones - are located in tax havens which further diminishes their transparency and increases the tax benefits to their managers. Boosting efficiency of private industry does not require the private equity business. Installing better management would do the job as well - and at much lower cost.

How to regulate High-Frequency Trading - part 2

After last week's 'fat-finger-accident' a full investigation into the methods of HFT is required more urgently than ever. This should comprise full public disclosure of complete transaction records so that independent outside analysis would be possible. This would help to find answers to two questions in particular: (1) is the high-frequency trading fair to all market participants (2) who profits from it? As some major firms guard the secrets of their algorithmic trading (Goldman Sachs for example persecutes a former employee who it accuses of taking proprietary information about algorithms) there is a suspicion that things are skewed against the wider investing public - why else would someone try to keep information secret?

A quote from Barron's Magazine may shed further light on this problem: "our market structure has evolved to cater to masters of expensive technology, deployed unfettered by participants whose only concern is to squeeze out every last picosecond and fractional cent." (Sal Arnuk and Joe Saluzzi of Themis Trading).

Prudential: what deal has been agreed regarding capital adaequacy?

The pension system in this country to a large extent depends on private companies such as the Prudential to supply savers/retirees with a rock-solid guarantee that they will be there when and as long as they are needed. Deals such as the one just announced can at best be described as a stitch-up where the public is left in the dark about the exact terms and no one but the FSA, the quango in charge of protecting the interests or savers, investors and retirees, knows what standards are applied. Even worse, should a disaster occur and the provider get into trouble the government can simply walk away - even if the financial regulator made errors in assessing the financial health of the insurer. That shareholders are also kept in the dark is par for the course. As a German banker once famously said: Shareholders are stupid and insolent: stupid to invest and insolent to expect a dividend.

P.S.: It may amuse the reader that The Times has refused to publish a version of the above comment on its Website. We can only assume that we have touched a raw nerve and that the editors did not want to give the impression that they allow criticism of the authorities to be published on their site.