May 03, 2004

silhouette3.JPG From the desk of Mindles H. Dreck:

That'll Show Him

BBC NEWS:


Microsoft head Bill Gates has been fined $800,000 (£450,000) for failing to report a large shares investment, US officials say.

Given the sizes he invests in, you'd think he files on every trade.

But this is just a bullshit excuse:

By US law, certain individuals and firms have to notify regulators before they can complete acquisitions of stock or assets worth more than $50m.

Mr Gates reportedly thought he was exempt from the rule because the purchase was for investment purposes.


Since when does that make any difference? The exemption he is trying to claim is generally only available to investment advisers:

Exchange Act Rule 16a-1(a)(1) contains specific, individual exemptions from the beneficial ownership definition for certain holders if the securities are held (i) for the benefit of third parties or in customer or fiduciary accounts in the ordinary course of business and (ii) without the purpose or effect of changing or influencing control of the issuer. Holders include such money managers as broker-dealers, banks, and registered investment advisers and are listed in Rule 16a-1(a)(1)(i)-(ix). In addition, there is a further separate exemption for a group which is composed solely of holders who each carry a specific individual exemption under Rule 16a-1(a)(1).
(emphasis mine)

Good help is so hard to find.

P.S. Is everybody enjoying the detour into securities law? Good. Hang on, 'cause the fun is just beginning. Now let's talk about the new best execution rules...

Hello? Anyone?

Posted by Mindles H. Dreck at May 3, 2004 09:51 PM | TrackBack | Technorati inbound links
Comments

You mean you aren't dying to discuss the newly proposed anti-late trading rules for mutual funds?

Posted by: Dr. Manhattan on May 3, 2004 11:30 PM

I'm not sure that he'd even notice the missing $800K.

Posted by: Frankenstein on May 4, 2004 04:05 AM

I think it is funny that a mind-numbing article calls something mind-numbing.

And, according to my calculations, 800K to Bill Gates is like $100 to you and me. Basically, he got a speeding ticket.

Posted by: Chris Farley on May 4, 2004 07:37 AM

So, I'm actually going to be able to figure out why I sold at 12.23 moments after being quoted 12.35 and moments before being quoted 12.30?

Should make for interesting reading, actually. . .

Posted by: Derek Lowe on May 4, 2004 09:10 AM

Yes, he "basically" got a speeding ticket, for "basically" speeding. Yes, he's rich, so $800k effects him less than it would effect me. An eight-year-old figures that out. Can you explain to me why this violation is a big deal and warrants a more significant punishment?

Posted by: Geoff on May 4, 2004 10:59 AM

Are you sure that this was a Section 16 reporting issue and not an HSR issue?

Posted by: me on May 4, 2004 11:45 AM

"New rules?" Maybe two years ago, when that article was written.

Posted by: Maqo on May 4, 2004 11:57 AM

Geoff - I didn't recommend a higher fine, I just called Bullshit on the excuse. I'm not even sure the rule should exist, although I'm not bothered by most disclosure rules.

Maqo - I'm old, thanks for reminding me.

'me' - the Hart-Scott Rodino 'investment purposes' exemption is for amounts under $50 million, and has been very narrowly interpreted.

I'm boring even myself now.

Posted by: "Mindles H. Dreck" on May 4, 2004 02:27 PM

Bills thoughts:

Ameritrade said it would only cost $8.....
.... $800K is a 10,000,000 percent increase....
.... Last time I do business with them....

Posted by: Pat in CA on May 4, 2004 02:57 PM

"And, according to my calculations, 800K to Bill Gates is like $100 to you and me."

I remember an article where someone pointed out that Bill Gates makes enough money that it wouldn't be worthwhile for him to take two seconds to bend over to pick up a $500 bill, as he could make more money in that time with his normal business routine. The writer suggested tongue-in-cheek that this wouldn't prevent Gates from getting the $500--if he became aware that people were leaving large bills on the ground in his path, he could just hire someone at $20/hr to walk with him and pick it up. A low-stress career, if you can get it.

Posted by: M. Scott Eiland on May 6, 2004 01:01 PM

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