Academics, tax practitioners, and members of both political parties in the US have criticized the so-called carried-interest loophole for many years.1 Although a recent proposal to close the loophole estimated the US Treasury would only collect an additional $17 billion in revenue over ten years,2 the loophole continues to receive criticism due to its political…
Tag: Hedge Funds
Fujifilm Suit; Activist Hedge Fund Concerns
In early February, activist hedge fund investor Darwin Deason filed a lawsuit against the well-known company Xerox1 The basis of the lawsuit stems from Xerox’s proposed merger with Fujifilm, which would lead to the creation of a new entity called, Fuji Xerox, and give Fujifilm a 50.1% stake in the created entity.2. Deason filed the…
Will Pension Funds Leave Hedge Funds?
There are growing concerns that hedge funds, referred to as the “gold rush of the 21st century,” are troubling investments for pension funds.1 For instance, pension funds have decreased their investments in hedge funds by 25% from 2011 to 2014. 2 In September 2014, Calpers, the California Public Employees’ Retirement System, stunned the investment world…
In Takeover Battle, Allergan Agrees to Special Meeting Amidst Critique of Restrictive Bylaw
On September 15, 2014, Allergan made a concession in its contentious battle to thwart Valeant Pharmaceuticals and hedge fund Pershing Square Capital Management in their joint attempt at a $53 billion takeover of Allergan. 1 The concession was to agree to the special meeting called by Pershing Square with the hope of voting out a…
It May Be Time to Revisit Institutional Shareholder Activism
Institutional shareholder activism has often been viewed as a positive corporate governance tool to ameliorate shareholder collective action problems and keep management teams and boards of directors in check, particularly for large public companies with a widely dispersed group of shareholders. Typically, an activist shareholder (ranging from large individual stockholders to institutional investors) will use…
Did You Hear That Tweet, Wall Street?
Almost every user of social media like Facebook and Twitter knows that information they post online will be read by someone else, and might even be repeated to others. But what if the social media user was someone in the financial industry or a giant corporation announcing a strategic move or product development, and the…
The Rise of Third-Party Litigation Financing in the United States
Litigation financing is a central concern for parties before any serious litigation is undertaken. Given the high costs associated with high stakes litigation, many law firms are willing to create financing plans with clients that will enable the parties to move forward with their cases. Arrangements where law firms work on a contingency basis have…
The Caribbean Detroit: Puerto Rico’s Debt Crisis
Despite the severity of the debt circumstances in Puerto Rico, the financial crisis has gone largely unnoticed. The lack of attention on Puerto Rico is particularly shocking when comparing the crisis to the current state of Detroit. The island has a population of 3.7 million and debts of about $87 billion; this compares with a…
Hedge Funds: A Solution to the Collective Action Problem
There is a collective action problem in any system where an informed vote is costly to a shareholder.1 Such a collective action problem is present among shareholders of publicly traded companies in the United States.2 Small shareholders are rationally apathetic in their voting decisions because they assume (usually correctly) that their vote will not change…
Tech in 2014: Bring out the Bubbly or Pop goes the Bubble?
Giants like Facebook and Twitter have entered the public markets with huge valuations, and more tech companies are expected to follow in 2014. However, this is only stirring the debate on whether those popping champagne bottles are the precursor of a popping tech bubble. Some say that we are seeing the dot-com bubble all over…