Jul

23

Donald Trump set to open US retirement market to crypto investments
President preparing executive order to allow 401k plans to tap broad pool of alternative assets

Hm. Entry for ordinary folks or a sneak way / exit for established players? Have a got a picture of the angel fish in my office, to remind me of the deceptive nature of markets. Angler fish are those ambush predator fish living in deep sea, that can illuminate poles in front of their jaws….to catch smaller fish.

William Huggins writes:

am reading Gustavus Myers' History of Great American Fortunes (1907) at the moment and just absorbed 300 pages of railroad fraud perpetrated by those who got their hands on the "mcguffin" asset and then sold it off only once they had successfully looted the value. the same sort of economic transfer happens for early crypto adopters - those trillions of market cap are "paper only" until some rubes can be fleeced of their efforts for the worthless securities foisted upon them.

Stefan Jovanovich comments:

I hope this comment will not be read as argument or rebuttal but only as a factual footnote to Myers' work. The 50,000 shares issued by Fiske et. al. were "legal" in the same way that carried interest is "legal". They were allowed by New York State law in 1868.

The primary limitation on the issue of new shares of common stock for the Erie was its corporate charter. The board only had authority to issue $30 million in capital stock. Any issues above that amount required amendment of the corporate charter by the legislature and majority shareholder approval. The additional 50K of stock issued, at its par value, did not increase the total capitalization above the $30 million limit.

NY State law in 1868 allowed non-cash consideration. The contracts that the Erie board accepted as payment for the new shares were, in nominal dollars, fully equal to the par value of the shares issued. Shareholders had the right to challenge that claim; they were, as litigant frequently are, disappointed by the rejection of their challenge. The result was a situation that can be politely described as "judicial uncertainty" - i.e. a battle of conflicting injunctions.


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