Deutsche Boerse pays fine for supposed Insider Trades by CEO

Is this the proper way to handle this investigation? Is it just hush money? And who approves of these payments? Are the regulators complicit in a cover-up? And is there really no other person fit to run what was until not so long ago a quasi-public institution run for the benefit of its users? (Reuters)
(14-Sept-2017)

Kick-back Fraud in M+A transactions

News that German authorities investigate up to 30 employees of Bayerische Landesbank in connection with the takeover of Hypo Alpe Adria raises an important but often neglected point with regard to Merger and Takeover transactions. We do not even want to delve into the fact that many are value-destroying at least half the time. This has been proven in many academic studies and any experienced investor will have watched in disbelief when supposedly smart managements engage in deals that make no sense for one of the two involved parties. While better corporate governance will help to alleviate many weaknesses of the merger process little attention has been paid to a darker side of this process. As the abuse is incredibly difficult to prove not many instances of outright fraud have come to light over the years. Of course, situations where incumbent management of the takeover target or one of the merged companies is promised attractive new terms in the combined business do not pass the smell test. The practice that option and share awards to management are 'crystallised' and can be cashed in before their nominal due date can also be considered to be a questionable inducement to go ahead with a business combination. Passing on explicit bribes such as hard cash is even more difficult to detect but can never be excluded as long as decisions about major transactions are often made by a small circle behind closed doors. Only the restriction of all decision making to the full body of shareholders - and even then in a process subject to strict regulation - will prevent Merger and Takeover deals from being influenced by corrupt practices.
(28/02/2011)

Madness 'Mit Methode'

An expression that may need to be introduced from German into the English language is: 'Der Wahnsinn hat Methode' (Madness with Method). It means an ironic reference to something considered mad that is perpetrated with single mindedness and complete neglect of the fact that the action makes little or no sense at all.
This expression comes to mind when one has a look at the recently released interpretation to the Investment Tax Law released by the German Ministry of Finance. We did not expect a short and succinct paper but our jaw dropped when the paper popped up on our computer screen: a full 147 pages!
Given the thousands of pages of new legislation and edicts that are produced by our Solons every year this may not be a surprise but it highlights in chilling detail how far removed from the real concerns of the citizens the political class has become in the past few decades.
This is just another building bloc on the way to the destruction of private saving and pride of citizenship.

Lording it over the shareholder peasants

Not much has changed in German Corporate Governance - Governments of the Left and Right come and go, commissions publish their reports, regulators slumber in their plush offices and collect their secure salaries and pensions (at least no bonuses there!). The farce that just seems to come to an ignominious end with the takeover of Porsche by Volkswagen illustrates all that is wrong with Corporate Governance in Germany - one of the leading industrial nations but still stuck in deep 19th Century ideas of shareholder democracy. The German expression 'Gutsherrenmanier' comes to mind as the most appropriate word to sum up the way that the political and business 'Elites' carve up the control of businesses that are owned by the shareholder community (which comprises not only German investors and savers but also those from many other countries). How is it possible that Volkswagen agrees to pay a price for Porsche that many analysts describe as overly generous and has not been discussed properly with the public shareholders? How can people that have an economic interest in both companies be allowed to be party to the merger discussions? How can a government (The state of Lower Saxony) be part in this questionable arrangement? All we can say: anyone considering investing in German Shares does so at his own peril and should demand an extra premium to be at least partly protected against these shenanigans.