May 30, 2012

Actually, I *Was* Uninformed

I had only read the first page, which is very general. The rest of it is quite interesting and I'm going to look at some other sources. There seem to be three basic areas:

1) the NASDAQ glitch on opening day. The article does not relate this to any supposed new information that was being circulated, nor does any other source I looked at.

2) The reporting of current mobile vs. landline trends. This seems to be at the heart of the author's charges. If Facebook falsified their financials, then they are guilty of fraud. But no one seems to be coming out and actually claiming that, at least not in so many words. Here's what Facebook said in its initial prospectus:

5....As an example, we believe that the recent trend of our [daily average users] increasing more rapidly than the increase in the number of ads delivered has been due in part to certain pages having fewer ads per page as a result of these kinds of product decisions These decisions may not produce the long-term benefits that we expect, in which case our user growth and engagement, our relationships with developers and advertisers, and our business and results of operations could be harmed.

In the infamous May 9 disclosure, which was sent to all prospective buyers, "five new sentences were added to the prospectus as a result (including the sentence in point 5 above relating to the number of ads delivered)."
[font size = "1"](Source: http://blogs.wsj.com/deals/2012/05/24/dealpolitik-suing-facebook-best-of-luck/)[/font]

Unless current revenue or traffic statistics were falsified, it's clear clear where the fraud is.

3) That leaves the internal selling. The company did not have the traditional holding period for employees and insiders. Perhaps it should be a requirement, but it's not. It's not surprising that a lot of employees who had been working for stock instead of salary wanted to cash in, get out of debt, and secure their retirement.

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It does look like Facebook fought their underwriters to maximize the IPO price. Insiders cashed in and retail investors lined up and said "take my money." The investment banks and institutional buyers took the major hit -- perhaps that is why the issue has some traction.

Something might be unearthed in the shareholder suits. But at this point I have to agree with the article linked above:

But what about those research analysts changing their estimates? It probably could not have worked any other way under our current regulatory scheme. Analysts who work for underwriters are prohibited from publishing their research prior to an IPO. They are permitted to talk to their clients and give their views. They are required to be independent from the investment bankers who run the IPO. If the May 9 disclosures caused them to think a change in their estimates was appropriate (and how could they not when a new “recent trend” was disclosed?), their independence requirement presumably forced them to make such changes. But the law still prohibited them from publishing any of their research.

Is there an unfairness in our regulatory system in which institutions have access to research analysts in an IPO and retail investors do not? There may well be. But that does not mean there was a violation of the law.

It is possible some deep dark conspiracy among Facebook and its underwriters could eventually surface. But there is no evidence of that yet.

May 13, 2012

Well, Since You Asked,

at the risk of bringing down the condemnation of the whole board, here is what I believe is the most cogent argument against gay marriage:

Pretty much all societies have had an institution of heterosexual marriage. Some societies have practiced and condoned, or at least not condemned, gay sex. Even in those societies, however, marriage was still an exclusively heterosexual institution.

Using a definition that's been relatively unified across cultures and throughout history, gay people have always had the right to marry. But because they're gay, they may not want to avail themselves of that heterosexual institution.

Introducing same-sex marriage is therefore not a matter of removing discrimination against a particular group. It requires changing the concept and definition of marriage in the law.

As the gay community has pointed out, there are hundreds of ways gay people are disadvantaged by not having their long-term relationships recognized as a marriage, including employer health coverage, survivor benefits, hospital visitation, and inheritance. Those are important issues of equal treatment that really need to be addressed.

The problem with doing this by simply changing the definition of marriage is that marriage is not merely a legal institution. While there is no direct parallel, it is more more like a joint status agreed on by both the law and by organized religion.

A legal marriage is created not only by getting a marriage license, but by a wedding ceremony performed by any recognized religion or denomination, or by the state. Couples cannot simply freelance and claim a legal marriage. With very few exceptions, marriages are recognized by all faiths regardless of whether they were performed by a judge or a priest in another faith. Not even fundamentalists or cultural xenophobes think of a couple as 'living in sin' if their wedding was performed in a courthouse, a mosque, or a Buddhist temple. The legal and religious elements are inextricably intertwined. Changing one can easily be seen as changing the other.

There are various ways of modifying the law to eliminate the inequalities resulting from hetero-only marriage. One is by creating a separate institution of civil unions. While originally hailed by the gay community, a decade later it was being condemned as grossly inadequate, if not a matter of outright bigotry. There is also the option of creating a civil institution of life partnerships that applies to both gay and hetero people and disengages the legal and religious components from each other. It would mean making all marriages civil unions in the eyes of the law and leaving religious ceremonies and the matter of defining marriage to the individual faiths. That would appear to meet most objections of both sides of the issue, but has not really been championed by anyone so far.

The simplest way of addressing the equality and civil rights issues involved is simply expanding the legal definition of marriage to include same-sex unions. However, because the legal and religious elements of the institution are so closely aligned, it is seen by many of its opponents as taking one of the holiest ceremonies of their faith and applying it to something that is condemned both in both the religious sources and the history of the various faiths.

Gay sex has pretty clearly been proscribed throughout the history of Judasim, Christianity, and Islam, not to mention other traditions. Recently modernist portions` of some faiths have begun to drop prohibitions against gay sex, but it comes at the cost of turning on its head the history as well as the founders and the documents of their own traditions.

There are efforts recently to harmonize gay relationships with the various faiths. They are interesting, but none of them come close to showing what they claim to show. Using the analogy that Leviticus prohibits shellfish ignores the entire distinction between ritual and moral law, and between Jewish ceremonial regulations and universal moral principles. Deducing approval from Jesus' silence on same-sex relationships ignores his proscription of adultery, his promotion of celibacy, his brother's extreme asceticism, and the entire culture in which he operated. We don't know if David and Jonathan were gay or whether they had sex, but the story written about their relationship is not presented as sexual in nature and has never been understood that way. We don't know exaclty how the medieval same-sex ceremonies were regarded by the priests who performed them, but if they were condoning a sexual partership, they were departing very significantly from their own faith -- there is a reason these ceremonies were so obscure that the records were only recently brought to light.

A lot of opposition to same-sex marriage has been driven been religious teaching, but it is not only religious -- mainland Chinese people routinely object to gay marriage with no reference to the Judeo-Christian tradition. Indeed, a lot of opposition to gay marriage certainly appears to come from personal bigotry. That is shown by propositions such the NC amendment which written to prevent any means of addressing the legitimate concerns of people in a same-sex partnership. On the other hand, there is (believe it or not) a certain segment of the religious population that is amenable to addressing the civil rights issue on a legal basis. For example, an educated and devout but very conservative man said to me that just because gay people may not have equal rights in the next life doesn't mean they shouldn't have equal rights in this one.

If all opposition to gay marriage is attributed to implacable bigotry, the game is lost in much of the US. In practice, support varies quite a bit by the specific legal proposal and how it is communicated and promoted. The current campaign seems to me to be an unnecessarily in-your-face way of promoting equality, and IMO, it is much less successful than it would have been to pursue a strategy of keeping the whole issue on a civil, secular basis. It is too complex an issue for broad brushes, too delicate to ignore tact, the prospects too uncertain to simply run roughshod over countervailing concerns, and too important to acquiesce in a patchwork of bad state laws. But unless the federal government can overrule the state, it appears that may be the status quo for the next few decades.