Quote:
Originally Posted by ChinoCoug
I work for an agency that grants me access to the operations of much of the financial industry. I see reports (not made to the general public) of certain "holding" companies that have, say $1K in revenue and $30M in expenses. It's obvious that the entity exists only to shield the losses of its subsidiaries, so those subsidiaries can pad their annual and quarterly reports. And its not like these are isolated incidents either.
These kind of shenanigans send bad signals to investors, creating bubbles and the like. When the SEC increases regulations to create more transparency, the industry will devise new tactics. A regulation policy is like a security policy; it needs to constantly updated to fend off new viruses.
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A holding company exists to own shares of outstanding stock. It does not shelter losses.
I think you are referring to "shells," which exist for structural purposes and do shelter losses.
However, all gains and losses for subs would roll up to the consolidated return, so not sure what you mean about shells bilking the investing public.