No Justin, that is totally incorrect. As I say in my article: "FOFA does not apply to wholesale (as opposed to retail) investors, nor to any normal business issuing shares, senior bonds, subordinated bonds or hybrids (preferred equity) to raise money to fund their operations. In these cases, conflicted commissions are permitted." Nobody is trying to get FOFA to apply to a company issuing debt or equity securities to raise funding for working capital. Where FOFA does apply normally is to all investment products---it prevents people paying conflicted commissions to brokers/advisers to sell investment strategies (ie, funds) to retail investors, though these commissions are allowed for wholesale investors. After FOFA became law, the industry lobbied to have LICs/LITs excluded, and they became exempt. We have since seen fund managers shift capital raising to the ASX so they can use conflicted commissions to raise money from retail investors. Without these commissions, these funds would not raise a fraction of this money through normal FOFA channels.
we use both--ie, we model both
nicely put, Jerome