Sarbanes-Oxley, a draconian visa application process, in addition to relatively low valuations and higher interest rates, aren't the only things making U.S. capital markets less attractive to foreign issuers of IPO's; a cartel that keeps IPO fees high is also part of the problem.

The U.S. Supreme Court looks likely to allow U.S. investment banks to continue to keep immunity from anti-trust laws around IPO fees.  (see Reuters story) (see Forbes.com story)

This action seems hypocritical of a government that claims to be pro free market. Sadly, it is being decided in the courts.   Congress should pass legislation that may be bad for U.S. investment banks in the short-run, but will help allow the U.S. to hold on to its position as the world's largest capital market in the long-run. 

Any action to disrupt the anti-trust exemption would hurt the earnings of all global investment banks that underwrite IPOs in the U.S.  However, I don't think this cartel will be disrupted anytime soon.   Even if U.S. IPO fees fell, the largest U.S. investment banks have very diverse earnings mixes that include trading, bonds, asset management, individual brokerage, private equity and hedge fund services.

Among the largest U.S. investment banks and IPO underwriters are Goldman Sachs (GS), Morgan Stanley (MS), Merril Lynch (MER), Lehman Brothers (LEH) and Citigroup (C), JPMorgan Chase (JPM).

How does this affect Neubert's Portfolio?  I own Lehman Brothers (LEH), Morgan Stanley (MS), Citigroup (C) and Bank Of America (BAC).

Disclosures and Confessions: ^{_{I own Lehman Brothers (LEH), Morgan Stanley (MS), Citigroup (C) and Bank Of America (BAC).  I was employed as a managing director at Lehman Brothers from 2003 – 2005. I continue to be vested in Lehman Brothers' executive compensation plan.  I was employed by Morgan Stanley (MS) from 1993 – 2003. I was a Managing Director from 1998 – 2003.  I continue to be vested in the Morgan Stanley Executive Compensation Plan.   I was employed from 1990-1993 by Chemical Bank which eventual become JPMorgan Chase (JPM), I participation in any part of JPMorgan.  I own Citigroup (C). I own Bank of America (BAC)}}

_{Disclaimer: Nothing in this trade log is meant to be specific financial advice or a recommendation to buy or sell. I do not give investment advice. Do your own research. Do not rely on anything in this weblog to make investment decisions. I do not log all my trades here. I only describe or mention those that I think might be interesting. Consult an investment professional familiar with your specific financial situation before buying or selling any security. Options may be for me but they are are not for everyone.  Futures are highly speculative.  You can lose more than your initial investment in futures.}