Monday, December 10, 2007
We have all become aware of the financial clout of sovereign capital in the markets today, as sovereign funds in the Middle East and Asia are stepping in to bail out the cash-strapped megabanks hit by the subprime crisis. SEC Chair Cox, in a recent speech, "The Rise of Sovereign Business," before the American Enterprise Institute Legal Center for the Public Interest, addressed how (1) state-owned or controlled corporations in the public markets and (2) government-owned commercial investment funds are challenging the conventional approaches to the roles of government and the private sector, respectively, in an era when the world's capital markets are converging. He asks: is there a point at which the entire financial activity we call a "free market" stops being that and morphs into something else? He addresses specific SEC concerns, including enforcement, conflicts of interest, market efficiency, and transparency.