Value creation by corporate development and IPOs vs. enterprises with closed- or with open ownership
This post concerns different financial models for value creation:
A. Corporate development financed by OPM* in companies, which are listed for liquidity;
B. Family-owned firms - which may have an internal “bank" for owner(s);
C. An open ownership model for economic co-responsibility + other efforts, which can be made negotiable.
*) OPM = Other People’s Money. Cf. Louis Brandeis. 1914. Other People’s Money: And How the Bankers Use It.
Financial groups - and other financials with several roles "under the same hat" - focus on model A
They invite those who manage “Other People’s Money (OPM)" - e. g. fund managers – to participate as investors in their clients' businesses. Since 1988 the financial group model has resulted in a corporate development and increasing corporatism that change the distribution of power and undermines pluralism. Today's favored financial groups, securities-brokers and fund managers practice so-called "cross-selling strategies" stimulated by internal bonus schemes to obtain transaction fees. By contributing to stock market-listings, capital raising and increased marketability, they can obtain additional fees.
There is little need to stimulate an already influential financial economy. Politicians, media, lobbies and authorities do, because they focus on "Names" in financial markets – and tend to regulate to their advantage.
Small and mid-sized enterprises (SMEs), hereunder family-owned firms, are mainly activities with closed ownership. They represent model B
It doesn't have to be this way. SMEs account for a large share of GNP and job creation in well-developed economies. They mean a lot to the real economy - and therefore they are of general interest. By enhancing economic co-responsibility in SMEs, one can strengthen access to equity capital for further development, shared interest, empowerment and spread ownership. Therefore, academia, analysts, politicians and authorities should focus on SME-behavior, ethics & enterprise as well as predictability – and less on special interests & lobbies. Then they will understand the real economy's need for general, predictable policies, institutional development and basic infrastructure - read: identify what is perceived as improvements (read: real innovations with social impact).
However, investors in SME-shares should be sceptical of ill-prepared, costly IPOs of companies without "Names" in media and markets - and many are. Assembling and spreading risk in a model C-vehicle (see below) can be an alternative – e.g. to avoid premature(e) listing(s).
Model C is Social Enterprises for Impact Investing - organized as Collaborative Value Networks (CVNs). They can keep roles in financial markets separate and thereby contribute to impartiality
How and why? Social enterprises can have a "No-Group-Structure", which combines a business- and an open ownership model. Social enterprises have a precedent within deposit-financed activities such as savings banks and mutual insurance. However, they can also be developed for raising equity capital by assembling strengths, spreading risk and self-directed asset management. Bankier.co has proposed this since the establishment of a bankier-house in 1988 - as well as by promoting the idea of an investment firm with single role trustees/fiduciaries in the capital market since 1995. This has happened against strong head winds, because the national authorities favored certain business models; namely, multi-role financial groups, securities brokers and fund managers.
Note: Favoring is illegal - as to EEA-/EU law. Cf. optional reading on Bankier.co's history since 1988 on the Page: "Restructuring & Reorganization", which supplements the Case below.
A Case about illegal favoring of financial incumbents by national authorities
Illegal favoring should be stopped by EU/EEA infringement proceedings - resulting in "National Remedy" and "State Liability"; i.e. compensation of damages caused by e.g. faulty and/or late implementation EU-directives.
Bankier.co has on behalf of Bankierhuset AS/Ltd. complained to ESA in Brussels since July 15, 1999. Then it had been proven that the EU's investment service directive 93/22/EEC had been incorrectly implemented due to a special Norwegian Security Regulation 10-1996, which favored the securities brokers. An "Investor Compensation Scheme (ICS)”, similar to that, which already existed in other EU/EEA countries, was not possible to achieve on one’s own by Bankier.co. In other words - an ESA complaint was necessary to achieve "National Remedy". But, an “ICS” came much later - in the form of the Securities Firms’ Protection Fund on July 1, 2006, also called "Lex Evensen" due to Bankier.co's ESA complaint.
Favoring of securities brokers continued. On November 1, 2007, the EU's MiFID I was incorrectly implemented, because investment service-definition no. 7: “Placing financial instruments without a firm commitment basis” was lacking; i. e. raising capital to SMEs without "Names" in the media and markets had not been implemented in the national law of securities firms.
A correct implementation of the EU's MiFID II was carried through 6-2019 without any further "National Remedy" and "State Liability", i. e. compensation for damages caused by errors and/or late implementation of EU Law and regulations. It could happen, because the lobby of the financial industry is influential - and because Norway is a major power in ESA. The other participants are the EEA countries Iceland and Liechtenstein. Therefore, ESA has so far failed to demand that Norway carry out "National Remedy" - as well as "State Liability" in the above-mentioned case of complaint. ESA and the Norwegian financial authorities have been- and are constantly reminded of this injustice.
Note: Bankier.co's ESA complaint since 7-1999 still has more than 10 active dossiers. The damage to Bankier.co's initiative is small compared to huge, negative consequences for the real economy - caused by favored, transaction fee-driven players of the financial economy, who underserve needs of SMEs, including family-owned enterprises, without "names" in the media and markets.
Favoring of influential special interests are found everywhere - especially in the financial markets and when it comes to climate- and environmental challenges.
Value creation by the different financial models, A – C, mentioned above must be based on environmental viability by "Green Pricing"; i. e., by stimulating and/or taxing the actual use of resources and technical standards - to achieve a real "Green Shift". Therefore, access to competent trustees in the fields of Pro-Active Restructuring and Reorganization (PARR) will be needed - as well as specialized courts for financial reconstruction and resource conflicts, which will require efforts from: www.UNCITRAL.org.
Ingress:
The above Case is based on efforts to stimulate share savings and to organize share owners in order to achieve good ownership policies, since a proposal of public control by a registry of share savings (1977) - and the start of the Share Savings Association in Norway (1979) - e.g. to obtain a Share Savings Account (SSA) tax-free until withdrawal with a profit for all types of equity savings - also if you choose to reduce a salary by having the employer deposit the salary-saving-amount in the form of shares in the SSA. Look to a book: "Economic co-responsibility – a dividing line in politics' (1981) - and establishment of tAssociation of Enterprisers in Norway (1987) with secretariat at the Polytechnic Association in Oslo. The latter was actively opposed by the Federation of Employers, despite what it could mean for the real economy. Look to Sweden - where www.foretagarna.se is the largest business organization with arm's length to party politics and employers.
This post concerns different financial models for value creation:
A. Corporate development financed by OPM* in companies, which are listed for liquidity;
B. Family-owned firms - which may have an internal “bank" for owner(s);
C. An open ownership model for economic co-responsibility + other efforts, which can be made negotiable.
*) OPM = Other People’s Money. Cf. Louis Brandeis. 1914. Other People’s Money: And How the Bankers Use It.
Financial groups - and other financials with several roles "under the same hat" - focus on model A
They invite those who manage “Other People’s Money (OPM)" - e. g. fund managers – to participate as investors in their clients' businesses. Since 1988 the financial group model has resulted in a corporate development and increasing corporatism that change the distribution of power and undermines pluralism. Today's favored financial groups, securities-brokers and fund managers practice so-called "cross-selling strategies" stimulated by internal bonus schemes to obtain transaction fees. By contributing to stock market-listings, capital raising and increased marketability, they can obtain additional fees.
There is little need to stimulate an already influential financial economy. Politicians, media, lobbies and authorities do, because they focus on "Names" in financial markets – and tend to regulate to their advantage.
Small and mid-sized enterprises (SMEs), hereunder family-owned firms, are mainly activities with closed ownership. They represent model B
It doesn't have to be this way. SMEs account for a large share of GNP and job creation in well-developed economies. They mean a lot to the real economy - and therefore they are of general interest. By enhancing economic co-responsibility in SMEs, one can strengthen access to equity capital for further development, shared interest, empowerment and spread ownership. Therefore, academia, analysts, politicians and authorities should focus on SME-behavior, ethics & enterprise as well as predictability – and less on special interests & lobbies. Then they will understand the real economy's need for general, predictable policies, institutional development and basic infrastructure - read: identify what is perceived as improvements (read: real innovations with social impact).
However, investors in SME-shares should be sceptical of ill-prepared, costly IPOs of companies without "Names" in media and markets - and many are. Assembling and spreading risk in a model C-vehicle (see below) can be an alternative – e.g. to avoid premature(e) listing(s).
Model C is Social Enterprises for Impact Investing - organized as Collaborative Value Networks (CVNs). They can keep roles in financial markets separate and thereby contribute to impartiality
How and why? Social enterprises can have a "No-Group-Structure", which combines a business- and an open ownership model. Social enterprises have a precedent within deposit-financed activities such as savings banks and mutual insurance. However, they can also be developed for raising equity capital by assembling strengths, spreading risk and self-directed asset management. Bankier.co has proposed this since the establishment of a bankier-house in 1988 - as well as by promoting the idea of an investment firm with single role trustees/fiduciaries in the capital market since 1995. This has happened against strong head winds, because the national authorities favored certain business models; namely, multi-role financial groups, securities brokers and fund managers.
Note: Favoring is illegal - as to EEA-/EU law. Cf. optional reading on Bankier.co's history since 1988 on the Page: "Restructuring & Reorganization", which supplements the Case below.
A Case about illegal favoring of financial incumbents by national authorities
Illegal favoring should be stopped by EU/EEA infringement proceedings - resulting in "National Remedy" and "State Liability"; i.e. compensation of damages caused by e.g. faulty and/or late implementation EU-directives.
Bankier.co has on behalf of Bankierhuset AS/Ltd. complained to ESA in Brussels since July 15, 1999. Then it had been proven that the EU's investment service directive 93/22/EEC had been incorrectly implemented due to a special Norwegian Security Regulation 10-1996, which favored the securities brokers. An "Investor Compensation Scheme (ICS)”, similar to that, which already existed in other EU/EEA countries, was not possible to achieve on one’s own by Bankier.co. In other words - an ESA complaint was necessary to achieve "National Remedy". But, an “ICS” came much later - in the form of the Securities Firms’ Protection Fund on July 1, 2006, also called "Lex Evensen" due to Bankier.co's ESA complaint.
Favoring of securities brokers continued. On November 1, 2007, the EU's MiFID I was incorrectly implemented, because investment service-definition no. 7: “Placing financial instruments without a firm commitment basis” was lacking; i. e. raising capital to SMEs without "Names" in the media and markets had not been implemented in the national law of securities firms.
A correct implementation of the EU's MiFID II was carried through 6-2019 without any further "National Remedy" and "State Liability", i. e. compensation for damages caused by errors and/or late implementation of EU Law and regulations. It could happen, because the lobby of the financial industry is influential - and because Norway is a major power in ESA. The other participants are the EEA countries Iceland and Liechtenstein. Therefore, ESA has so far failed to demand that Norway carry out "National Remedy" - as well as "State Liability" in the above-mentioned case of complaint. ESA and the Norwegian financial authorities have been- and are constantly reminded of this injustice.
Note: Bankier.co's ESA complaint since 7-1999 still has more than 10 active dossiers. The damage to Bankier.co's initiative is small compared to huge, negative consequences for the real economy - caused by favored, transaction fee-driven players of the financial economy, who underserve needs of SMEs, including family-owned enterprises, without "names" in the media and markets.
Favoring of influential special interests are found everywhere - especially in the financial markets and when it comes to climate- and environmental challenges.
Value creation by the different financial models, A – C, mentioned above must be based on environmental viability by "Green Pricing"; i. e., by stimulating and/or taxing the actual use of resources and technical standards - to achieve a real "Green Shift". Therefore, access to competent trustees in the fields of Pro-Active Restructuring and Reorganization (PARR) will be needed - as well as specialized courts for financial reconstruction and resource conflicts, which will require efforts from: www.UNCITRAL.org.
Ingress:
The above Case is based on efforts to stimulate share savings and to organize share owners in order to achieve good ownership policies, since a proposal of public control by a registry of share savings (1977) - and the start of the Share Savings Association in Norway (1979) - e.g. to obtain a Share Savings Account (SSA) tax-free until withdrawal with a profit for all types of equity savings - also if you choose to reduce a salary by having the employer deposit the salary-saving-amount in the form of shares in the SSA. Look to a book: "Economic co-responsibility – a dividing line in politics' (1981) - and establishment of tAssociation of Enterprisers in Norway (1987) with secretariat at the Polytechnic Association in Oslo. The latter was actively opposed by the Federation of Employers, despite what it could mean for the real economy. Look to Sweden - where www.foretagarna.se is the largest business organization with arm's length to party politics and employers.