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Money Stuff: Owning Chinese Companies Is Complicated

In my old life, I was a derivatives structurer at an investment bank, and an experience that I frequently had was getting calls like this:

Sometimes there was! If you came to me and said “our client would like to buy 8% of a public company, but not disclose her ownership,” I would say “well, under U.S. law you do have to disclose that level of stock ownership, but I could put you in a nice derivative that gets around that requirement.” The client could enter into a swap that gives her economic exposure to the shares, but not actual ownership, so she would not be subject to the laws about ownership disclosure. Everyone is happy, more or less. (No one is happy, and we have talked a few times about how mad everyone is that Archegos Capital Management was allowed to do this.)