In keeping with the increasing convergance of private equity and hedge funds, I find myself dreaming up hedge fund strategies in any number of strange situtations. Most recently, literally, I dreamed it. I am pretty sure the seed was planted elsewhere, but it has recently been bolstered by an article in The Guardian (which a fond reader, reading my mind, also recommended and quoted in an email today). That reader also points to a Bloomberg piece wherein British authorities related with chill voices, the prospect of a purchase of the London Stock Exchange by U.S. interests exporting SarOx to their shores. Quoth The Guardian:
Sarbanes-Oxley, the US rules introduced in 2002 after the collapse of Enron, are at the root of the latest worries and were yesterday cited by the pharmaceutical company, Acambis, for its decision to withdraw its listing from Nasdaq. London has also been attracting new stock market listings because of Sarbanes-Oxley - a matter now being studied by the US treasury secretary, Hank Paulson.
Mr Balls's efforts were welcomed. John Pierce, chief executive of the Quoted Companies Alliance, said: "We're very anxious that the London boat isn't rocked, and the bogey is Sarbanes-Oxley." The investor lobby group, ABI, said it hoped that "the powers proposed to be given to the FSA will prove an effective safeguard for the exchange to remain UK-regulated".
The U.K. plans to prevent any buyer of London Stock Exchange Plc from importing rules to the British market amid concern that a fresh takeover bid by Nasdaq Stock Market Inc. may spur changes to regulation.
"The Sarbanes-Oxley regime in the U.S. is not a regime that some companies find easy to deal with,'' Ed Balls, U.K. treasury economic secretary, told reporters in Hong Kong today. "Were there to be an exchange of ownership, this could have the effect over time of rules from other countries being imported into the U.K.''
Since the increasing flight of U.S. firms from Sarbanes seems likely to spur some change in the U.S., (WSJ subscription required) wouldn't it be the time to buy U.S. listed firms, making loud noises each time about the crushing weight of SarOx as the root cause, wait for the regulatory easing (servicing debt meanwhile) and then go IPO in a spectacular blitz of prospective future spin? Regulatory arbitrage at its finest.