Skip to main content

More on securities fraud and sulfur

 


Let us return to as subject broached last week, the US Supreme Court's decision in MACQUARIE INFRASTRUCTURE v. MOAB PARTNERS. 

As I noted, the case involves the private (tort) use of an SEC rule, 10b-5, and it says that the omission of material facts by the issuer of securities will NOT present a cause of action in tort by a buyer of the securities unless the omission is such as to render statements that actually WERE made by the company misleading.  

Today I'd like to say something about the specific underlying issue. Some of Macquarrie's most valuable assets are terminals for the storage of fuel oil. Its terminals are designed to accommodate high-sulfur fuel oil. 

What Macquarrie neglected to say, setting up Moab's ire and this lawsuit, is that under the influence of a United Nations rule relating to climate change, high sulfur fuels are getting phased out around the world. That's a good thing.  But it is a very bad thing for the value of the Macquarrie assets that it will render obsolete.    

The usual bald statement of this case raises hackles from both America-First nationalist and anarchists (of all variants). The UN.  That blue-helmeted pipsqueak effort at global government?  Has their takeover proceeded so far they can give rules to and destroy the value of assets of private companies?

Well ... high sulfur fuel is generally used in shipping. In 2016 the International Maritime Organization, a UN sponsored institution, limited the sulfur content of the fuel used in shipping.  Major shippers, most of which are headquartered well outside of the US, and generally in countries that follow the Paris Accords that inspired the IMO rule, went along with this without a lot of fighting. According to the rule they had until 2020 to comply, and that was enough time to get ship manufacturers to construct them new vessels that wouldn't need the high-sulfur stuff. 

Half way through this transition period, in February 208, Macquarrie announced that there had been a drop in the amount of space contracted from its warehouses for the storage of the stuff being phased out. Its equity lost about two fifths of its value immediately.  

Macquarie had not disclosed to investors that such a regulation had been put in place, or that the shippers were ordering up ships from their manufacturers that wouldn't need the high-sulfur fuel. Canny investors could have found out on their own. The proceedings of the IMO are no secret, after all.    

And Moab Partners was not a collection of babes in the woods. 

Personally, I am not outraged by any of this. Perhaps it is the post-anarcho-cap in me taking over, but it seems a bit of a relief not to feel the necessity of ginning up some outrage for Moab.  



Labels:

Comments

Post a Comment

Popular posts from this blog

A Story About Coleridge

This is a quote from a memoir by Dorothy Wordsworth, reflecting on a trip she took with two famous poets, her brother, William Wordsworth, and their similarly gifted companion, Samuel Taylor Coleridge.   We sat upon a bench, placed for the sake of one of these views, whence we looked down upon the waterfall, and over the open country ... A lady and gentleman, more expeditious tourists than ourselves, came to the spot; they left us at the seat, and we found them again at another station above the Falls. Coleridge, who is always good-natured enough to enter into conversation with anybody whom he meets in his way, began to talk with the gentleman, who observed that it was a majestic waterfall. Coleridge was delighted with the accuracy of the epithet, particularly as he had been settling in his own mind the precise meaning of the words grand, majestic, sublime, etc., and had discussed the subject with William at some length the day before. “Yes, sir,” says Coleridge, “it is a maj...
9 comments
Read more

Searle: The Chinese Room

John Searle has become the object of accusations of improper conduct. These accusations even have some people in the world of academic philosophy saying that instructors in that world should try to avoid teaching Searle's views. That is an odd contention, and has given rise to heated exchanges in certain corners of the blogosphere.  At Leiter Reports, I encountered a comment from someone describing himself as "grad student drop out." GSDO said: " This is a side question (and not at all an attempt to answer the question BL posed): How important is John Searle's work? Are people still working on speech act theory or is that just another dead end in the history of 20th century philosophy? My impression is that his reputation is somewhat inflated from all of his speaking engagements and NYRoB reviews. The Chinese room argument is a classic, but is there much more to his work than that?" I took it upon myself to answer that on LR. But here I'll tak...
17 comments
Read more

Recent Controversies Involving Nassim Taleb, Part I

I've written about Nassim Taleb on earlier occasions in this blog. I'll let you do the search yourself, dear reader, for the full background. The short answer to the question "who is Taleb?" is this: he is a 57 year old man born in Lebanon, educated in France, who has been both a hedge fund manager and a derivatives trader. He retired from active participation from the financial world sometime between 2004 and 2006, and has been a full-time writer and provocateur ever since. Taleb's writings for the general public began where one might expect -- in the field where he had made his money -- and he explained certain financial issues to a broad audiences in a very dramatic non-technical way. Since then, he has widened has fields of study, writing about just about everything, applying the intellectual tools he honed in that earlier work. As you might have gather from the above, I respect Taleb, though I have sometimes been critical of him when my own writing ab...
4 comments
Read more