This is the disclosure gap worrying the SEC?

January 28, 2010

In what we first took to be satire from The Onion, the SEC has ruled that companies should warn investors of global warming risks.  The story can actually be found in the 1/27/10 New York Times.

After a couple humiliating years of being behind the curve on protecting investors, and despite being still short of manpower, the SEC has nonetheless found the time to address one of the most alarming deficiencies in corporate disclosures that exists today: the absence of boilerplate in every 10-K addressing the problem of global warming.

A better idea: let investors know that “legislation concerning global warming” (as opposed to global warming itself) poses a risk to business.  But given that 10Ks can’t possibly be long enough to encompass all the bad potential legislation out there, maybe companies just need to disclose that “Your government poses a myriad of potentially devastating threats to our and all businesses.  Please call your Congressman if this worries you.”

UPDATE: this video from 1/29 at WSJ’s News Hub makes our points and even steals our opening quip:

UPDATE II: (4/13/10)

AFL-CIO President Richard Trumka doesn’t like the restructuring that sometimes occurs when a company is purchased by “Wall Street,” and believes “It’s Time to Restrict Private Equity.”

Under current law, private investment vehicles—hedge funds, leveraged-buyout and venture-capital funds—function with virtually no oversight. Despite managing trillions of dollars and employing millions of Americans, they operate as a shadow financial system—in secret, free to take on out-sized risks, and make huge bets with no outside supervision.

Since the SEC is very busy worrying about global warming, wouldn’t it just be easier to legislate that businesses can’t fire workers?  It’s done wonders for job growth in Europe.

Well, to really get control of it all someone would have to explain to Mr. Trumka the difference between hedge funds, leveraged-buyout firms, and venture capital:  hedge funds invest in already public companies, leveraged-buyout funds use financial engineering to drive their investment return, while venture capital funds invest in small private growth companies that hire new workers – companies that produce most of the new jobs in this country.

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