I enjoyed your story on preemptive rights. It is pretty extraordinary that preemptive rights are mandated for all significant equity offerings throughout most of the world but held in disdain in the U.S. (in the U.S., rights offerings are often dismissively referred to as “European” rights offerings, i.e. foreign, distasteful).

Still, I think the dynamics of traditional rights offerings are neither quite as positive for ordinary shareholders nor quite as negative for bankers as you make them out to be in your brief summary. For instance, it looks to me like the bankers in the HSBC deal, led by Goldman Sachs, grossed a minimum profit in the range of $300 million (and perhaps a good deal more); while that is a modest percentage of the $17.7 billion raised, it’s nothing to sneeze at. Meanwhile, rights sometimes do not trade separately from the shares and, in any case, shares and rights may not trade efficiently during the offering period, so, however attractive the price on new shares may be, some shareholders may not be able to stomach the risk to ante up or “participate” through sale of the right or by efficiently hedging their position. Finally, management’s interests in a “European” rights offering is at odds with shareholders’ (management has a financial incentive in keeping the discount small; shareholders’ best interest is served by a large discount). All of these points are explored in greater depth in my report on the subject (see http://www.ssrn.com/article=1430711 ).

In any case, glad to see you back “blogging”, and I look forward to the success of your Capital Market Wiki project.

I‘ve not had time to post to this blog for a long time because I’ve been working on a large non-profit endeavor that I think has a chance of helping investors more.

A new endeavor — Capital Market Wiki

This new endeavor is called, “Capital Market Wiki“, a free encyclopedia of world capital market based on open source collaborative research of volunteers of all skill levels.

The first article on this new encyclopedia can be found here:
First article.

The standard commercial sources of investment information have failed to protect investors, as has the SEC. So it is up to investors to band together and dig out the information themselves, publishing the facts we all need for mutual protection.

This is a massive, ambitious enterprise, but, I think, worth a try.

Founding editors needed

Please visit the site at Capital Market Wiki and join us as a founding editor. The project needs you.

The Capital Market Wiki project was open to the public in March 2009, after 30 months of preparatory work.

I’m getting back now to posting to Capital Flow Watch.

Anyone who would like to help promote either this blog or, more importantly, Capital Market Wiki, can do so by posting comments and links to this blog on other blogs, on twitter, or any of the other social networking links that are available on the Internet