Wednesday, December 27, 2006

How to Hide an Elephant - (Update)

If only my market-timing were so good! Just last week in the previous post in fact, Cassandra detailed the (oh so brief) history of reporting transparency in the Japanese equity market, leading up to an observation positing that "the elephants" (FMR, Cap Research, etc.) and the large-but-simply-paranoid have been employing "new" techniques to non-report their market pecadilloes.

Well this morning new regulations will take effect, according to Bloomberg, whereby authorities will be demanding that holders of greater than 5% positions are now required to file position updates twice a month. This apparently is in direct response to the rather un-cricket rule-bending discovered by authorities in their investigation of Takefumi Horie and the Livedoor affair. While any loophole-closing is better none (at least in Cassandra's view), this doesn't address the specific loop-hole of transactions that, in spirit confer ownership, such as swaps, OTC option-like structures that are employed for, and priced as if there were no other reason for the transaction than to to accumulate a position without triggering disclosure.

A big test will be at this year-end to see who, with the large position, is increasing their holdings (and as a result the stock price of said holdings) into the mutual fund bonus measurement period and the hedge fund calendar year-end. Anyone care to guess who'll win the ignominimous award of being the most blatant?!?!

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