Selling America Short

I occasionally wish that I understood the American (and global) financial system better. It was in just such a moment that I picked up Selling America Short: The SEC and Market Contrarians in the Age of Absurdity by Richard Sauer. As a guide to understanding the market it probably wasn’t the best choice, but it was a fun read. The book is mainly a collection of stories from Sauer’s personal experience working (sequentially) for the SEC, a law firm, and a hedge fund. There was just enough information about the actual mechanisms of financial regulation to completely confuse a novice like myself, the general message being that the financial system is a poorly regulated and enforced train wreck waiting to happen. Goody.

The first half of the book is a fun financial cops-and-robbers where the SEC chases around the globe trying to convict fraudsters and reclaim at least some of the investors’ money. It’s upbeat and fascinating, introducing such unendearing characters as the Deemster from Hell, but ultimately showing that at least sometimes right will triumph. Unfortunately, once Sauer left the protective arms of the SEC for the riskier world of hedge funds depression begins to set in for the reader. It becomes clear that in the highly image-reliant world of investments, a company’s stock price can rely as much (or more) on the skill of its lawyers in shutting up questioners as it does on the company’s actual value. While the story is still interesting (who wouldn’t love a chapter entitled “The Easter Bunny Cometh”?), it loses the cheeriness of the book’s first half. Of course, readers will do well to remember that this is a personal memoir and Sauer is to some extent taking oblique reputational vengeance on those who helped destroy the company he worked for and apparently believed in. Still, I’ll personally take his word over that of the Easter Bunny.

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