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Our Washington lawyer/lobbyist friend (anonymous as always) offers some new observations on the theatre of the absurd that is Congress in the process of reviewing securities regulation:

The only thing Senators on the Judiciary Committee seem to know is that a small public company called Overstock.com (with lots of alleged problems) is running a campaign against those mean rich hedge funds from New York. The title of the hearing gave away their ignorance: "Hedge Funds and Independent Analysts: How Independent are Their Relationships?"

Independent Research is called independent because it is not affiliated with investment banking, i.e., the sell-side. Hedge funds are on the buy-side.

No one who understands the markets can justify regulating the free flow of information and analysis when it is unconflicted, i.e., not affiliated with the sell-side..

Click on this link to see an independent researcher wets himself, then pleads guilty while innocent, copping a plea that he (and his peers) be regulated, including a Public Company Accounting Oversight Board-type authority to set "standards" for independent research. This is not a good idea for anyone.

These views are confoundingly foolish and reckless. No need to sound the alarm, though, since they have no chance of becoming real without an amendment to the securities laws by Congress, which just won't happen. However, who knows what could happen if congress changes hands.

A wise man I know once defined a "populist" as someone who doesn't quite understand the theater but does enjoy a good pie-in-the-face.

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