Weil on Finance, P.M.: Fraud on the Market

Jonathan Weil joined Bloomberg News as a columnist in 2007, and his columns on finance and accounting won Best in the Business awards from the Society of American Business Editors and Writers in 2009 and 2010.
Read More.
a | A

Greetings, View fans. Here are your afternoon links.

Big securities case coming at U.S. Supreme Court

Kevin LaCroix, who runs a blog aimed at the insurance industry called the D&O Diary, has an informative look at a Supreme Court case in which the justices plan to revisit the "fraud on the market" presumption. There's a chance they may set the theory aside. As LaCroix explains: "The presumption allows plaintiffs in securities suits under Section 10(b) to seek certification of a shareholder class without having to show that each one of the shareholders relied on the alleged misrepresentation. Without the benefit of the presumption, it would be much more difficult for Section 10(b) claimants to pursue their claims as a class action." By 10(b), he's referring to antifraud provisions in the Securities Exchange Act of 1934.

Cool real-estate statistic of the day

From an article by Bloomberg News reporter Jeremy Kahn about soaring prices for London mansions, also known as "super prime" homes: "Despite the global financial crisis -- or, more accurately, because of it -- prices in the London neighborhoods of Belgravia, Chelsea, Kensington, Knightsbridge and Mayfair have risen 23 percent from their previous peak in March 2008, according to real estate brokerage Knight Frank LLP." Among the people driving up the prices: Emerging-markets tycoons, including those who want an easy way to launder money.

In defense of German austerity

Steve Hanke, a Cato Institute senior fellow and Johns Hopkins applied-economics professor, writes that "the confused souls who point at German-inspired `fiscal austerity' as the cause for the Eurozone's struggling economy are flat wrong." He says a bigger cause is bank de-leveraging, which is about to get worse because of new regulations and stress tests by the European Central Bank: "Indeed, this monetary austerity might just push Europe from anemic growth into a recession."

The big question on a lot of investors' minds

Are asset bubbles the only way for central banks to boost demand? That's what Alen Mattich of the Wall Street Journal's Money Beat blog asks. "Both the pundits and central bankers are clearly tilting in favor of keeping asset prices frothy if that's the only way to keep the economy ticking over," he writes. "This will undoubtedly prove a mistake, though given the constraints under which central bankers operate, it's a mistake they may well feel they have no choice but to make."

Toronto Mayor Rob Ford at a football game

The commissioner of the Canadian Football League asked him to stay away from last night's Toronto Argonauts playoff game, but Ford went anyway, and he brought with him a crude tin-foil replica of a CFL Grey Cup championship trophy. The Argonauts lost, and now all of Toronto can blame that on Ford, too.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Jonathan Weil at jweil16@bloomberg.net