Guide to Analysing Companies
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FINANCE Essencial finance
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146 FORWARD COVER 02 Essential Finance 10/11/06 2:22 PM Page 146 takeover or new issue of securities, to false accounting in a company’s accounts, to pretending to be a registered broker, to simply forging cheques. As the corporate scandals that erupted in the United States at the beginning of the 21st century show, shareholders and em- ployees alike rely to a large extent on the integrity of people who run big international companies. If such people choose to bend or break the law, the consequences can be far-reaching. People’s jobs and pensions can be wiped out, and regulators are forced to introduce complicated new rules to prevent abuses from happening again. A clean glove often hides a dirty hand. English proverb Freddie Mac The name used by the Federal Home Loan Mortgage Corpora- tion, an unusual body that is owned by its stockholders but op- erates under a charter from Congress. Freddie Mac was set up in 1970 to boost home ownership in the United States. Like fannie mae (the Federal National Mortgage Association), Freddie Mac does this by buying mortgages from banks and other providers, repackaging them as securities and then selling them to investors in the market. Securitising mortgages in this way replenishes the money available to banks to lend to home buyers in the retail market and thus helps to encourage home ownership. Freddie Mac also buys mortgages for invest- ment on its own account. To raise the money to do this, it is an active issuer of its own bonds and securities in the debt market. FRN See floating-rate note. F FRN 147 02 Essential Finance 10/11/06 2:22 PM Page 147 Front running An illegal practice where a broker buys a security after gaining inside or privileged information. When the information becomes public and the price of the security goes up, the broker sells at a profit. For example, a banker may buy shares in XYZ company in advance of a general offer for all the shares by another company which he or she happens to be advising. Such practices are not only illegal but can often be detected by study- ing dealing records. Download 1.1 Mb. Do'stlaringiz bilan baham: 
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