Five Things Wall Street Needs to Know Today, April 12, 2012

1. The “Buffet” Rule

President Obama continues to pitch the so-called “Buffet Rule” for increasing taxes on the wealthy.

CNN/Money reports that the White House argues that the rule will make the tax code more fair by making it hard for the “very rich” to lower their tax bills.

The Buffet Rule is said to be a talking point in the president’s s re-election bid. The key is that that millionaires and billionaires like investor Warren Buffett shouldn’t pay a lower percentage of their income in federal taxes than middle-class households.

However, the GOP opposes the idea as it will eliminate capital gains reductions and increase tax rates for everyone whose rates were lowered during the Bush administration – those tax cuts were extended last year by mutual agreement of Congress and the White House, but only until the end of 2012.

It remains to be seen whether the so-called Buffet Rule is nothing more than talk like “hope and change” back in the day.

2. What’s Under the Hedge Fund Hood?

New Dodd Frank rules are giving ‘we the people’ a peek into the curious world of hedge funds.

New disclosure requirements offer a bird’s eye view of ownerships stakes, investor composition and assets under management by fund. DealBook reports that the Paulson Fund may have pulled its punch while a number of other mega-managers, including S.A.C. Capital, have more clearly identified their funds in new filing documents.

The “data dump” from hedge funds is said to be part of an expanded effort by the federal government to shed more light on the industry. The filings are now required under new SEC and CFTC registration requirements applicable to the hedge fund sector.

3. SEC Desperately Seeking Feedback on the Jobs Act

The Securities and Exchange Commission said that is “soliciting” public comment on the JOBS Act.

This is an initial step as the securities watchdog plans to drop new policies under the JOBS Act that the president signed last week. The law requires regulators to conduct studies and amend its disclosure and registration requirements.

The “Jumpstart Our Business Startups Act” is designed to make “broad changes to major securities regulations,” says DealBook.

In sum, the rules ease restrictions that separated Wall Street research analysts from investment bankers, “softens” a rule restricting “communication” among bankers, companies, investors and analysts, and also exempts small companies from various public disclosure requirements.

Most important is a new form of internet-based financing to start-up companies known as “crowdfunding” that allows companies to go online to raise up to $1 million.

But the law “irked” regulators, who argue that lighter regulations could expose investors to harm. So the SEC is seeking public comment to glean what Wall Street and Main Street think about this bi-partisan political play that was conveniently passed in an election year.

4. Federal Reserve Head Honcho Says Policy is Status Quo

Bloomberg News reports that Federal Reserve Bank of St. Louis President James Bullard thinks “an improving U.S. economy may push the unemployment rate down to 7.8 percent by year’s end.” This means the central bank is likely to keep monetary policy unchanged. In other words another round of “quantitative easing” is unlikely.

But then, that is a matter of what the definition of “is” is, like a former US President once said.

Meanwhile, the Fed President reportedly said that the Federal Reserve will probably “stick with the idea that the economy will generally be better in 2012 than 2011.”

That said, U.S. job growth appears to have slowed in March and Fed officials are doling out mixed signals as they track the recovery’s progress. At the Federal Reserve’s Open Market Committee Meeting in March, the central bank hinted that it would favor renewed easing only if growth falters or inflation falls below the 2 percent target.

5. Best Buy Probe Goes On

Retail mega-store Best Buy’s probe into former CEO Brian Dunn’s personal conduct goes on as the electronics retailer looks for new leadership in the wake of his resignation.

Bloomberg News reports that the company said his “resignation certainly had an effect on the investigation, but the investigation remains open.”

Best Buy announced Dunn’s resignation yesterday as “mutual agreement” that new leadership was needed. The Richfield, Minnesota-based company later said that a board committee was investigating Dunn’s “personal conduct, unrelated to the company’s operations or financial control.”

Meanwhile the company has been cutting jobs and shifting to smaller store formats amid competition from Internet retailers such as Inc. So it remains to be seen if the company will end up in the bargain basement.

Kyle Colona is a New York based freelance writer and a Feature Writer for the Compliance Exchange. He has an extensive background in legal and regulatory affairs in the financial services sector and his work has appeared in a variety of print and on-line publications.

About Kyle Colona

Kyle Colona is a New York-based freelance writer and a Feature Writer for CompliancEx and the Wall Street Job Report. He has an extensive background in legal and regulatory affairs in the financial services sector and his work has appeared in a variety of print and on-line publications as well as his blog, “Colonaville.”

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