The UK’s Institutional Investor Council has issued a blistering report on the excessive fees that investment banks charge companies to issue new shares — fees which one issuer are “usually immoral”. It certainly seems that way, looking at this chart: fees have been steadily increasing over time, even as the discount at which the new shares are issued has got larger and larger. The bigger the discount, of course, the less risk taken on by the underwriter, since the more that the share price would have to plunge overnight in order for the underwriter to risk losing money on the deal.
“The history of the Internet is, in part, a series of opportunities missed,” says Jim Surowiecki in this week’s New Yorker. Blockbuster could have bought Netflix for $50 million dollars; Excite turned down the chance to buy Google for less than $1 million.
There’s been a lot of talk over the past couple of days, since Gawker was hacked, about how embarrassingly insecure its users’ passwords were. More than 3,000 users had “123456” as their password; almost 2,000 had “password”. There’s a long tradition of servicey journalism explaining how to generate secure yet memorable passwords, and telling those of us with insecure passwords that “what you’re doing now is going to come back to bite you”.
Many thanks to Peter Lattman and Diana Henriques for answering my question from last week. Yes, as I suspected, there is a secondary market in Madoff claims — although from the tone of the article it seems more like a primary market, where hedge funds compete with each other to buy claims from people who have been defrauded, rather than a well-functioning secondary market where those funds actually trade the claims between each other. The going rate seems to be about 30 cents on the dollar, with an expected payout, somewhere down the line, of roughly double that amount.
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