From: ichudov@Algebra.COM (Igor Chudov @ home)
Date: Sun, 8 Jun 1997 06:57:38 +0800
To: dlv@bwalk.dm.com (Dr.Dimitri Vulis KOTM)
Subject: Re: Responses to "Spam costs and questions" (long)
In-Reply-To: <8TZX8D18w165w@bwalk.dm.com>
Message-ID: <199706072240.RAA03045@manifold.algebra.com>
MIME-Version: 1.0
Content-Type: text



Dr.Dimitri Vulis KOTM wrote:
> ichudov@algebra.com (Igor Chudov @ home) writes:
> > There is a lot of commercial compelled speech. For example,
> > mutual funds must say that past performance is not a guarantee
> > of future results.
> >
> > Do you find this kind of compelled speech unconstitutional?
> 
> (Is Black Unicorn reading this?)
> 
> The purpose of the securities laws is not to protect the small investor
> (who gets fucked very thoroughly, thank you :-) but the large financial
> services firms with political connections.
> 
> For example the requirement to put out the red herring for a non-trivial
> IPO is there not to protect the investors who buy in on the IPO, but to
> ensure that the syndicate that underwrites the IPO gets their 2+%.

Actually, if I am not mistaken, the big securities houses like JP Morgan
objected very loudly when SEC was created in 1930s. They have probably 
adapted to the situation and manage to make a profit, but they probably 
adapt again if the regulations went away.

> Ditto for the entire legal framework, including the U.S. Constitution and
> any other country's legal framework - its goal is to protect the
> (economic) interests of the ruling class, and whatever serves those
> interests is "constitutional". Inasmuch as free speech on the Internet

And so what follows from this statement?

> threatens the murderous fascist dictatorship in Washington, DC, any
> restrictions on free speech are therefore "constitutional".
> 
> You remind me, Igor, of a recent story I read in a paper which I already
> threw away, so I'll reconstruct it from memory, probably with mistakes:
> 
> * a few folks from Long Island, not NASD registered,published an "investment
>   advice" newsletter, distributed over the Internet and fax. Subscriptions
>   cost >$1K/year. It was called something like "The Small-Cap Equity
>   Speculator" (not exactly, my apologies, but "speculation" was definitely
>   in the title)
> 
> * Among the many penny stocks they discussed was some kind of a motorcycle
>   manufacturer, whose name I forgot too. The newsletter recommended a buy
>   based on their fundamentals analysis and potential sales.
> 
> * Some of the folks who published the newsletter had a long position in
>   the stock, which they apparently bought months before the recommendation
>   for (gasp) $2,000 (two thousand dollars).
> 
> * The newsletter had a disclaimer that the authors may hold positions in
>   the stocks they're discussing [surprise!]
> 
> * The motorcycle stock fell in price, and the readers who bet on it lost money
>   - as did, I presume, the newsletter publishers.  Some readers complained to
>   the SEC, who's now trying to jail/fine the newsletter publishers.
> 
> * I no longer have the paper, and it wasn't terribly clear, but it sounded
>   like SEC was unhappy that
>    a) they were trying to drive up the price of the stock they were long
>       (with the intent to sell? :-)
>    b) they incorrectly analyzed the fundamentals and were wrong to
>       recommend a buy when the price in fact failed to go up
>       (The sales were like 10% of what they hoped for)
>   [Now if every amateur investment analyst who fucked up went to jail...]

... Or a mature analyst. Anyway, almost all of them fuck up.

There could be something else involved in that story, as it sounds, there
is little to prosecute these guys for, as far as I understand.

> If this is true (and I may be missing important details), then why are these
> unfortunates any less worthy of our support than, say, Jim Bell? :-)
> 
> Remind me some time to tell you in private e-mail of a few cases I witnessed
> when large, politically connected financial services firms engaged in conduct
> that would have landed you or me in jail - and it happens all the time.

I am interested.

	- Igor.