Sending Signals to Wall Street

Posted by , Mar 30, 2006, 9:03am

biz.jpgMarketwatch's David Weidner argues that leaky-Chinese-Wall poster boy Frank Quattrone's third trial is beside the point because the government isn't going after Quattrone for "possibility that Quattrone accepted what amounted to bribes for allotments of IPO shares":

Proponents of a third trial say a conviction on the obstruction charge will send a powerful message to Wall Street. If so, what's the message? Don't accept kickbacks for hot IPOs? Don't obstruct justice?

Wait. We thought the message was "don't use email." We're confused...

Frankly, it's about the IPOs [CBS Marketwatch]

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Posted in: Frank Quattrone

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Posted by Duffman, Mar 30, 2006 10:36AM

Quattrone is like a herpes sore--he just keeps comin' back...His must dye his moustache though, cause it's gotta be gray by now.

Posted by Daniel M. Harrison, Mar 30, 2006 12:09PM

You're confused and so is just about everyone else. Unfortunately, this is yet another example of a badly prepared regulator shooting from the hip when the going gets tough.

Instead of thinking things through, and researching problems thoroughly, the federal bureaucrats (not meant disparagingly) bow to the pressure of emotional and angry shareholders - who should have known better for a start - and find the nearest scape-goat they can.

The problem I think lies principally in the most basic law of economics: investment banks, by their very nature of paying so much in salaries, tend to attract the brightest people. Regulators, on the other hand, can only afford a pittance compared to these massive institutions, and it reflects in the people they employ.

What that translates into in times when a regulator goes head-to-head with a Wall Street institution/banker is first class intelligence vs. 2nd or maybe even 3rd class. The result is obvious: ineffective regulation.

Posted by Bulging Bracket, Mar 30, 2006 2:31PM

DMH: Add to that the fact that most of the regulatory staff want to work for the defense bar after a few years, nothing being better at getting into Cravath's despite going to UNLVLS than some work experience and a desperate need to have the competent people working for the Clients that are tired of getting beat up!

The only people that aren't subject to regulatory capture are the muddle headed lefties doing it out of idealism. They may be bright, but without a love for and a belief in the system they don't stand a chance against the same caliber folk that bvelieve in it (same reason why you best defence, environmental, and human rights lawyers tend to think that Stalin was a little to capitalist). The funny thing is that regulatory capture ala securities law or State Department dealings with the Saudis is as inevitable and intractable as owner-agent control issues in a public company.

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