Conservative economic commentary | capflowwatch

Investor protection:

US SEC lets issuers play “Where’s Wally?”

By John Schroy, on July 11th, 2009 |

The US SEC allows issuers to hide required disclosure by perceptual tricks that remind one of the children’s series, “Where’s Wally?”

These methods include burying warnings in a list of unlikely risks, incorporating facts ‘by reference’, loading documents with irrelevancies, and playing the ‘each fact in the proper document’ game.

Capital Market Taxonomy provides ready-to-use check-lists that help analysts cut through dense disclosure documents.

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State finances:

SEC equates California IOUs to munis

By John Schroy, on July 11th, 2009 |

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By July 2009, the State of California, one of the world’s larger economies, was unable to pay its bills, the result of profligate spending in the state legislature in Sacramento.

Governor Schwarzenegger was forced to issue State IOU’s to pay creditors.

The US SEC went along with this, declaring this fiat money to be equivalent to municipal bonds. As usual, California leads the country. In this case, the precedent is not good.

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