The Hot IPO and Why You Can't Get In On It

         Linked below is an informed piece speaking to one of the darkest secrets on Wall Street.  If you've ever wondered what kind of dough an investment bank rakes in by lowballing the issuing price on an initial public offering (IPO), and how, here's your answer.  Watching IPO prices immediately soar to spectacular heights in the aftermarket won't seem quite so dumbfounding anymore.

http://seekingalpha.com/article/1261971-where-banks-really-make-money-on-ipos?source=email_wsb&ifp=0

Why?

          So many jobs shipped overseas, lost and gone forever, Government implacably broken, business prospects dire every which way you turn, and the Dow Jones Industrial Average is setting new highs.  We’re tempted to say this has happened before, but it hasn’t.  Not in the face of this kind of structural hopelessness anyway.

         Who bought the market higher?  And what were they thinking?

         Ben Bananas has got to have something to do with it.  The notion that this economy can come back without jobs or fiscal stimulus is madness, and when it comes to madness, the Chairman of Federal Reserve Bunk is clearly the best we’ve got.  It’s a safe bet no kind of market madness could’ve gone anywhere without him.

         Then there’s all that redistributed wealth.  CEO’s and them have pilfered so much savings from the middle class, our society has been refitted into some kind of Third World caste structure, top-heavy with corporate elites.  Empowered pickpockets who got there solely by lobbying Washington for the means to loot our shareholder equity out of our personal accounts on our company’s books.

         On top of all this, many of those same corporations have been downsizing total shares outstanding for quite some time now.  Retiring stock rigs the market for those shares in kind of the same way Ben Bananas has been gaming the Treasury Bond trading floor with his QE escapades, by reducing supply in the supply v demand thing.  (Difference is, Ben prints brand new dollar bills while he's doing it, handing them out to all his banker buddies, who got us in this godforsaken mess to begin with.)

         Where we’ve become used to bull markets raging through the growth-on years of our business cycle, investors have suddenly been given reason to throw money into a new kind of growth-off environment.  Savings redistributed into the hands of people more inclined to invest in common stocks than their victims, a Fed honcho hell bent on turning current disarray into distant ruin by kicking the financial worms can down the road, and investments of choice scaling back the supply of paper available to invest in.

         These are the building blocks bull markets are made of nowadays.

         Then there’s you and me, the poor suckers who’ve got to provide income for ourselves some way somehow.  Where bonds have always been there for us in the past, many private investors feel they have to rely solely on dividend income today.  With Ben Bananas running that fixed income circus of his, there’s simply no other game in town.

         Everybody knows prices go South from places like here, but where can you go to wait the topping phase out?  In money market funds that yield nothing?  No, there lays the inflation monster, in wait to clean you out.

         So why?  Why's the question of the day, and these are the only answers we can come up with.  Frankly, they're not getting passed along to you with all that much conviction.

         It’s a whole new world out there, a puzzlement to us all.  One nobody has ever thought of before, let alone coped with.

         Welcome to the cutting edge of insanity.

Wealth Distribution

         Discussion of our nation's increased net worth inequality over the past 32 years continues to go on without reference to the role looted shares (mislabeled “stock options” in the media) have played since enabling legislation became effective on January 1, 1981.  Also unmentioned has been the creation of a brand new class of corporate elites and the preposterous heist of middle class savings they pulled off to effect this imminently catastrophic result.

         The video linked below is particularly depressing to us because it’s so good as well as so incomplete.  We’re told it went viral recently, so MacDougal decided our loyal subscribers would probably want to see it too.

http://www.youtube.com/watch?v=QPKKQnijnsM&feature=player_embedded

Investor v Speculator

         Exploiting how share buybacks can effect a rather substantial stealth increase in intrinsic value during lengthy periods of market underperformance, a concept that is invisible to the speculator in stock prices, the Warren Buffet perspective that spawned the article below strikes us as particularly worthy of attention in this post-Financial Apocalyptic Era.

         Note that starting total shares outstanding must actually be reduced by said transactions, meaning the argument does not apply to buybacks used to sop up new stock that CEO's and them issue to themselves as "equity compensation".  Those thieving pigs, as you may have read in these pages before, are stealthily looting our savings and belong in freaking jail after a highly visible perp walk covered by every last paparazzi camera in the Civilized World and Iceland.

         Here's the link:

http://seekingalpha.com/article/1241011-why-microsoft-and-intel-investors-should-be-glad-the-stocks-are-languishing?source=email_rt_article_title

Financial News Hotshots Notice Piece of $#!& Financial Regulator Is Pulling More $#!& ...... Reinvigorated Media Insouciance Expected to Follow

We lifted the piece below from the following bloomberg.com website:

http://www.bloomberg.com/news/2013-02-22/sec-boosts-tally-of-enforcement-successes-with-routine-actions.html

SEC Boosts Tally of Enforcement Successes with Routine Actions

By Joshua Gallu - Feb 22, 2013 4:00 AM CT

The U.S. Securities and Exchange Commission has been trying for four years to convince investors and critics that it’s back on the beat.

As part of that effort, the agency has cited a record number of enforcement actions over the past two years -- 734 in fiscal 2012 and 735 the year before -- as evidence that an overhaul of its investigative forces has made the regulator smarter, faster and more effective.

“The sustained high-level performance comes two years after the division underwent its most significant reorganization since it was established in the early 1970s,” the SEC said in a November statement when it released the tally. “The results in 2012 were aided by many of the reforms and innovations put in place in the past two years.”

However, an analysis of that data by Bloomberg shows that the SEC filed fewer new actions last year compared to 2009, the year before it reorganized. The agency didn’t surpass those levels in 2011 either.

About 228, or 31 percent, of the 734 enforcement actions were so-called administrative proceedings that institute penalties in cases that were already brought, sometimes years earlier. Examples of administrative actions include barring people who’ve already been found guilty of fraud from working in the industry, or from temporarily suspending accountants practicing before the SEC.

Excluding such follow-on proceedings, the SEC filed 506 original actions last year, fewer than the 520 it filed in 2009, the year before the reorganization. In 2009, 144, or 22 percent, of the 664 total actions were follow-on proceedings.

‘Bad Actors’

“The SEC is the only federal agency that can kick bad actors out of the securities industry,” SEC spokesman John Nester said in an e-mail. “These proceedings are fiercely contested, but it’s hard to see how investors would benefit if we won a fine in court but let the person go on cheating customers.”

When the SEC announced the results in November, then- Chairman Mary Schapiro cited the “innovative reforms” for the results.

“We’ve now brought more enforcement actions in each of the last two years than ever before, including some of the most complex cases we’ve ever seen,” she said.

Penalties Rose

The agency did order $3.1 billion in financial penalties and disgorgement of illegal profits last year compared with $2.4 billion in fiscal 2009. Investigators in specialized units set up under Schapiro also have brought novel electronic trading cases.

On the other hand, the number of actions was buoyed by the most so-called delinquent filings cases since at least 2006. Those cases often entail sanctioning or delisting companies that have stopped filing public statements. Typically, they require little investigation compared to securities fraud cases and aren’t related to the overhaul of the division.

Stock manipulators have used securities with delinquent filings to hype the price before selling the shares into the artificial demand they created, Nester said.

“Rather than wait until investors lose their money, we take the securities off the market before innocent investors are ripped off,” Nester said.

Nearly Half

Taken together, follow-on administrative proceedings and delinquent filings cases made up 48 percent of the enforcement division’s actions in fiscal 2012, compared with 36 percent in 2009, before the enforcement division was reorganized. At the same time, the SEC brought the fewest number of accounting-fraud cases since at least 2003.

In addition, the SEC issued 479 formal orders of investigation last year, down from 496 in fiscal 2009. A formal order authorizes staff to compel testimony and issue subpoenas.

The SEC has struggled for more than four years to beat back criticism that isn’t up to the job of policing markets. Lawmakers, investors and judges have faulted the agency for missing Bernard Madoff's multibillion dollar fraud and for not being tough enough on Wall Street for misconduct that helped fuel the financial market turmoil of 2008.

Schapiro, who was succeeded as chairman by Elisse Walter in December, took over the agency’s helm in 2009, just after Madoff’s multibillion dollar fraud was exposed. To remake the enforcement division, she tapped Robert Khuzami, who eliminated a layer of management and established specialized units in 2010 to focus on areas such as hedge funds, market abuse and structured products. The SEC also established a program to reward whistleblowers and set up a system to sort tips and referrals.

‘Increasing Complexity’

“It’s not simply the numbers, but the increasing complexity and diversity of the cases we file that shows how successful we’ve been,” Khuzami said in the November statement. “The intelligence, dedication, and deep experience of our enforcement staff are, more than any other factors, responsible for the division’s success.”

Khuzami stepped down earlier this month and was replaced on an interim basis by his deputy George Canellos.

The 2012 numbers cited by the SEC include follow-on actions for cases filed last year and in previous years, sometimes prior to Khuzami’s restructuring.

For example, Zvi Goffer, a former trader, was sued by the SEC in October 2009 in connection with the Galleon insider trading case. Goffer was convicted of criminal charges in 2011 and was later sentenced to 10 years in prison. In December 2011, the SEC submitted a three-page follow-on action barring Goffer from association with any broker or investment adviser. That was added to the division’s tally.

In another matter, the SEC sued Preston L. Sjoblom in March 2012 over claims he made false statements to investors about his company. In August, after the court had entered a final judgment against Sjoblom, the SEC filed a follow-on administrative order to bar him from associating with a broker. The SEC counted both actions in the 2012 results.