{"id":2036815,"date":"2023-09-19T03:22:02","date_gmt":"2023-09-19T07:22:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/private-equity-to-capitalisms-rescue\/"},"modified":"2023-09-19T03:31:07","modified_gmt":"2023-09-19T07:31:07","slug":"private-equity-to-capitalisms-rescue","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/private-equity-to-capitalisms-rescue\/","title":{"rendered":"Private Equity: Rescuing Capitalism"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">8<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fprivate-equity-to-capitalisms-rescue%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2036815&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><h2>Commentary<\/h2>\n<p><em>Running \u2064a publicly traded company in America in 2023\u2062 is torture. Breaking the federal government\u2019s voluminous rules, even unintentionally, can land you in prison. If, for example, a judge or jury can be convinced one of the investors in your public \u2063shares knew things he shouldn\u2019t have, \u2063and \u200bprofited from \u200cthe information, \u200dhe will be tarred, feathered, and incarcerated as an insider trader, the moral classification of which \u2064in the present culture lies many notches beneath that of \u200bsexual\u200b deviate.<\/em><\/p>\n<p><span class=\"s2\">The disgraced stock\u2063 trader Ivan Boesky\u2019s use of information regarding various companies\u2019 impending mergers \u200band \u200dother\u2062 proposed deals was an ill-defined \u2064offense seldom prosecuted, \u200cbut the mega-broker had made hundreds of millions of dollars, and resentment of \u200bwealth was in the air in the mid-1980s.\u2062 He ended up paying over $100 million in \u200dfines and \u2064spending three years behind bars, \u2063even though \u2063he agreed to \u2064rat\u2063 out on others.<\/span><\/p>\n<p><span class=\"s2\">All-star Major League Baseball \u200dslugger Doug DeCinces\u2019s crime essentially was to be a friendly next-door neighbor to the chief executive \u2063of a struggling publicly traded medical supply company. Instead of borrowing a\u2062 cup of sugar, the \u2062home\u200d run-hitting third baseman got a tip about an impending \u200cmerger \u2062and \u2064used it to \u2062make over a $1 million. The \u200bSecurities \u200dand\u2064 Exchange Commission (SEC) made\u2064 him pay $2.5 million, he was convicted on 13 \u200bcounts of insider trading, and in 2019 at age 68 sentenced to eight months of home detention. (It\u2019s \u2064unclear if the sentence forbade fraternizing \u2064across the picket fence with others in DeCinces\u2019s neighborhood.)<\/span><\/p>\n<p><span class=\"s2\">The\u200b real crime\u2064 seems \u2063to be\u200d that someone did too well and ignited envy and resentment in others.\u200b The truth is that insider trading\u2014legal\u200b until the presidency of\u2063 Franklin D. Roosevelt\u2014would make stock \u200bprices a \u200dtruer measure of the value of a company \u200bby providing more information to the market \u200csooner, benefiting all investors whatever their net worth might be.<\/span><\/p>\n<p><span class=\"s2\">According to Paul Mahoney, distinguished professor at the University of Virginia School of Law, the disclosure \u200bregulations imposed on \u200dpublic firms \u201cmay lead companies to remain private and therefore out of\u200c the reach\u200b of the mandatory disclosure system for public\u2064 companies. Such decisions can impose\u200b indirect social costs by keeping private firms operating at a suboptimal scale and by depriving retail investors of investment opportunities.\u201d The\u2062 social consequences should disturb even those on the \u200cleft because, as Mahoney notes, \u200d\u201cThe latter effect may exacerbate wealth inequalities because the regulatory system constrains the ability of typical retail investors to invest in privately held companies, but puts fewer\u2062 constraints on high-income or \u200c<a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/biden-pitches-largest-tax-increase-in-history\/\" title=\"Biden Pitches Largest Tax Increase in History\">high-net-worth households<\/a>.\u201d<\/span><\/p>\n<p><span class=\"s2\">When Republicans attain power, they\u2019ve been known to provide some\u200c deregulatory relief in\u2062 the investment sphere, most notably the case during the presidency of Donald Trump, but always in the face of\u2063 heavy fire from the Democratic Party and the media, their artillery consisting of accusations \u2063that the party\u200b of business\u200b is helping their \u2064\u201crich friends.\u201d Then the regulations all come back like gangbusters, plus \u200dnew ones, when the ever-more socialist-friendly\u200c Democrats get back in the driver\u2019s seat.<\/span><\/p>\n<p><span class=\"s2\">Providing a\u2064 solution may require a\u200c new paradigm, and the way forward\u2063 might come \u200bfrom the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/billionaire-who-committed-suicide-allotted-just-25-million-of-his-massive-fortune-in-will\/\" title=\"Billionaire Who Committed Suicide Allotted Just  Million Of His Massive Fortune In Will\">private equity industry<\/a>. Slandered\u2064 as heartless job destroyers, a charge that helped defeat 2012 GOP\u2063 presidential nominee, retiring senator, and Bain Capital co-founder \u2062Mitt Romney, private equity firms actually do\u200d the opposite. They save troubled or defective publicly traded companies \u2064by executing the \u200bextremely\u2064 complicated legal process of converting them \u2063into\u2063 private\u2064 companies, under which status \u2063the firms can be \u2063fixed. After \u2064such <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/bidens-energy-crisis-separated-california-family-from-their-hospitalized-newborn\/\" title=\"Biden\u2019s Energy Crisis Separated California Family From Their Hospitalized Newborn\">life-saving surgery<\/a>, they can, if \u2063ownership chooses, return to public\u2062 status, with all the access to \u200dcapital that \u2063offers, leading to \u2062expansion of their workforce and the prospect of lots more profit.<\/span><\/p>\n<p><span class=\"s2\">What if there were a way for firms seeking outside capital to \u2064reach the many \u200bof thousands of modest investors out there without having to \u200cbe a\u2063 public\u2064 company subject to \u2062suffocating over-regulation? This new\u2062 derivative instrument would probably entail such small investors signing\u200d away some or\u200c most \u2062of the rights \u2062enjoyed by stockholders, such \u200bas a\u200d contract stating that they are \u2063not among the owners of \u200cthe firm, have no vote as to who sits in\u2062 management,\u200d and \u200cmaybe even \u200dforfeiting any and all rights \u2063to sue management. But at the\u2064 same\u2064 time, \u200cthey would share in the \u200dprofits just as if they were shareholders in a public company.\u2064 An honest, transparent design would\u200d have to be formulated for\u200c the valuation of their investments, hardly an impossible feat \u2063considering the complexities formulated to contract \u200cexotic investment instruments like\u2064 puts, calls and hedges.<\/span><\/p>\n<p><span class=\"s2\">Unlike junk bonds, turned to initially to bypass SEC regulations designed\u200c to obstruct mergers and takeovers, this\u2064 new paradigm of retail investing ideally would\u2063 have its genesis in the passage of laws authorizing the\u200d described innovations\u2014hopefully featuring the\u2063 exclusion of the SEC and\u200d the rest of \u200dthe government from oversight \u200band penalty jurisdiction. It\u2063 is extraordinary \u200bto consider \u200cthat\u200d even the Department of Justice concedes that the\u200d figure \u200bmost associated with junk bonds, Drexel Burnham Lambert financier Michael Milken, who made a\u200c billion dollars\u200c over four years absolutely legally, was convicted not for \u200danything to do with selling high-risk instruments but for failing to disclose his tampering with the prices of securities. The governing principle is \u2062obvious: \u201cFind some way\u2014any way\u2014to get the guy \u200bwho made an obscene sum of money.\u201d<\/span><\/p>\n<p><span class=\"s2\">The costs of \u200coperating a public \u200dcompany are hardly worth the high blood\u200b pressure, and \u200cunburdening \u2064oneself of \u200cthe regulatory octopus via technical acrobatics has been tried again and again, and seems impossible. Congress must find\u2063 a way for investors to swim in other waters, where the creature does not lurk. Otherwise, as \u2063government regulation forces capitalism gets more complicated and expensive, a <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/private-equity-to-capitalisms-rescue\/\" title=\"Private Equity: Rescuing Capitalism\">pure socialist economic regime\u2014letting government \u2064run<\/a> everything\u2014will become ever more\u2062 seductive to voters.<\/span><\/p>\n<div class=\"my-5\"><em>Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.<\/em><\/div>\n<p> <\/p>\n<h2> How\u200d might the introduction of mini-bonds impact entrepreneurship and economic growth in the United States<\/h2>\n<p><span>  All dividend or\u2064 profit-sharing rights. In return, they would receive a periodic payment based on the company&#8217;s performance,\u200d similar to bondholders receiving \u200cinterest payments.<\/p>\n<p>This new instrument, let&#8217;s call\u2064 it a &#8220;mini-bond&#8221; for simplicity, would allow companies to\u2063 raise \u2062capital from a large pool of small investors without the burdensome regulations imposed on publicly traded companies. It would provide an alternative avenue for companies to access much-needed funding while avoiding the \u200cscrutiny\u200d and restrictions\u2062 that come with being a public \u2064company.<\/p>\n<p>Of\u200d course, there would need to be safeguards in place to protect\u200c investors. Companies \u200cissuing \u2062mini-bonds would still be required to \u2062provide transparent \u2063and accurate financial information, just like\u200d publicly traded companies. Independent\u200b auditors could verify the company&#8217;s \u200cfinancial statements to ensure compliance.<\/p>\n<p>Additionally, there could be limitations on the amount of capital a\u2064 company\u2062 can raise through mini-bonds to prevent abuse or fraud. Regulators could monitor \u200dthe \u200cmarket to ensure that companies are not exploiting small investors or engaging in unethical practices.<\/p>\n<p>The introduction of mini-bonds would\u200c not eliminate the\u200b need for\u200c public companies. Large corporations that require substantial capital\u2062 or prefer the advantages\u200b of being publicly traded would still have the option to pursue traditional IPOs. Mini-bonds would \u200dsimply provide an additional avenue for smaller companies or startups to raise capital \u200bwithout the burdensome regulations \u200bof being publicly traded.<\/p>\n<p>This \u2062new paradigm\u200c could stimulate entrepreneurship and economic growth by providing more opportunities for companies to access capital and expand their\u2063 operations. It would democratize\u200c the investment landscape \u200bby \u2064allowing small investors to\u2063 participate in\u2064 the growth of private\u200b companies, potentially \u2064bridging the wealth gap by providing investment opportunities that were previously only available to <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/seven-in-ten-millionaires-hesitant-to-leave-fortunes-with-their-lazy-children\/\" title=\"Seven In Ten Millionaires Hesitant To Leave Fortunes With Their \u2018Lazy\u2019 Children\">high-net-worth individuals<\/a>.<\/p>\n<p>In conclusion, the \u2063current\u200b regulatory environment for publicly traded companies in America is stifling innovation\u200b and hindering economic\u200b growth. The obsession\u200b with insider trading has created \u200da culture of fear and uncertainty for executives and investors alike. Introducing a new derivative instrument like \u2064mini-bonds could provide a solution by \u2064allowing companies to raise capital from small \u2063investors without the burdensome \u2064regulations \u200dof\u200c being publicly traded. This would \u2062not only benefit companies seeking funding but also provide\u2064 investment opportunities for small investors and potentially foster economic growth. \u2062It&#8217;s time to \u200breconsider the existing framework and explore new possibilities for corporate finance in\u2062 America.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>be charged with insider trading. The strict regulations and potential legal consequences make it incredibly challenging to navigate the corporate landscape. Any misstep can lead to severe penalties, highlighting the immense pressure faced by executives in the corporate world of America in 2023.<\/p>\n","protected":false},"author":368,"featured_media":2036816,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[543],"tags":[],"class_list":["post-2036815","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-epoch-times"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2036815","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/368"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2036815"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2036815\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2036816"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2036815"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2036815"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2036815"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}