Britain to Police Corporate "Dissatisfaction"

UK “Office of Fair Trading” to investigate IPO offerings.

According to a story by Erik Larson (of Bloomberg.com): “Britain’s antitrust regulator plans to investigate fees charged by investment banks for arranging initial public offerings and rights offers, work that generated 2 billion pounds ($2.9 billion) for securities firms last year.

“The probe, which will start later this year, will include fees, rights issues and other types of equity-raising following complaints of “dissatisfaction” from corporations, the U.K. Office of Fair Trading in London said today in a statement. “

Either two market participants are able to arrive at a mutually agreeable arrangement, or they are not. If not, of course, one or both parties will experience “dissatisfaction.” Why is that a motive for government intervention? Pubic Choice theorists might point to the following “dissatisfaction” as a motive: “The [Office of Fair Trading] is seeking to restore its reputation following the collapse in May of a criminal price-fixing case against four current and former British Airways Plc executives.” After all, if you haven’t busted any heads lately, you just might be in danger of losing some of your budget.  

The Gulf Oil Spill:So much for government’s reliance on expertise

On May 27, President Obama declared a six-month moratorium on deep-water drilling, citing the recommendation of Secretary of the Interior Ken Salazer, who said it (and other of his recommendations) “have been peer-reviewed by seven experts identified by the National Academy of Engineeering.”

Everyone hearing this statement should have recognized immediately that it is nonsense on its face. A policy action cannot be determined by science. So it makes no sense to say the recommended action was “peer-reviewed.” No engineer should pretend to weigh, as a matter of scientific expertise, the risk that an oil spill might result from continued deep-water drilling against the nation’s need for domestically produced oil. That is simply not an engineering question.

And yet the story may be more complicated. An Interior Department spokeswoman agreed that the experts had not given their blessing for a moratorium, and said the department did not mean to leave the impression they had. In fact, she said, the experts were merely asked to review 22 safety recommendations in the report.

"We didn't mean to imply that they also agreed with the moratorium on deepwater drilling," the spokeswoman, Kendra Barkoff, said. "We acknowledge that they were not asked to review or comment on the proposed moratorium and that they peer-reviewed the report on a technical basis. The moratorium on deepwater drilling is based on the need for a comprehensive review of safety in deepwater operations in light of the BP oil spill."

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