The FT has just reported that:
A $15bn New York investment company has used anonymous offshore companies to profit from some of the largest short-selling attacks in Europe over the past three years, including the unravelling of the UK company Quindell.
A Financial Times investigation can reveal that Tiger Global, which runs one of the world's largest hedge funds, has used Cayman Islands based shell companies to make large bets against at least 12 European companies since 2012.
As the FT says, this very obviously raises concerns about the effectiveness of new European rules aimed at forcing disclosure of those who are shorting markets.
But the reality is that what this really proves is exactly why we need publicly accessible registers of the beneficial ownership of all companies around the world, including in the Cayman Islands, who are holding out against them. This activity distorted markets. It undermined fair competition. The outcome is widely considered by many to be harmful. And none of it would have been possible if there had been an open and level playing field on which all operated, including basic data on who was undertaking trades, which is the pre-requisite of fair competition.
I've made the point before and I will, no doubt, make it again that what the tax justice movement demands (like beneficial ownership registers) are nothing less than the essential conditions for fair markets. It is those who oppose us who also oppose effective and fair markets, the Cayman Islands included.
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If you had read the FT in detail you would also note that the Quindell story is definitely to do with over-exuberant managers and fantasy accounting. This is not a case of short-sellers unfairly tarnishing a reputable business…
The issues are entirely unrelated
You suggestion is nonsense
You said “the activity distorted markets”. If by that you mean that non-disclosure of the shorting entity frustrated the purpose of the EU rules then yes. If you mean the act of shorting distorts markets by causing a price of a security which is inaccurate of value then this is not necessarily true.
As an example I would point to Sinoforest – a fraud for which the purported valuie of $5bn was fraudulent and the auditors did concede. The short sellers who exposed this and traded on the price fall profited did not distort the market in the securities, it was already distorted.
I was watching one of the films I sent you a list of and it showed Lloyd Finklestine (I think that was his name – CEO of Goldman Sachs) at one of the congressional hearings over the sub-prime mortgage disaster.
When he had his firms’ antics explained to him by a congresssman, all he said is something like ‘ All I see is market making’.
All I see is amorality – all that matters to these people is the bottom line and making money. Even that is untrue – as Satyajit Das says “All the financial sector does is move money around” meaning that it is not new money – it’s someone elses and they’ve used financial engineering to get their hands on it. In fairer times this wa called ‘daylight robbery’ but now it is the basis of a whole financial culture.
We do indeed live in dark times.
An FTT would have some effect on this, but what I’d rather see is an exchange for options, futures & trades so that they, like share purchases & sales are open for all to see.
We have the appalling situation that our economic wellbeing is determined by side-bets made by nameless, faceless, financiers in private.
We know nothing about it but have to deal with the consequences.
You’re right, of course, that we also want transparency. I want to know who owns Trafigura, if only so that, in an ideal world, someone could go up to them & punch their lights out.