Page 39 - Investment Advisor July/August 2023

“If you’re a regulator, you don’t want to see the Los Angeles Dodgers, Major League
Soccer’s Los Angeles FC and the WNBA’s
something that is holding itself out to be Los Angeles Sparks. His business inter-

like a security but which trades like tickets ests also spread well beyond the world
of professional sports into the infrastruc-
to a Taylor Swift concert. I think the ture and urban development industries.
In fact, as Johnson told the crowd at
‘Swifties’ out there who got burned buying Insite, he feels a deep, ongoing responsi-
tickets will agree with me.” bility to use his notoriety and leadership
talent to invest in inner-city communi-
— Jay Clayton ties and create redevelopment opportuni-
ties in underserved areas. He spoke on
of an investor protection framework.” fund, because so much of the growth and stage with his friend, mentor and business
As he pointed out, cryptocurren- return comes from the private markets.” partner Jim Reynolds, who is the found-
cies are touted as replacements for tra- Lowering the hurdles to accessing alter- er, chairman and CEO of Loop Capital.
ditional currencies but lack many of native investments, he argued, will require During an hour-long discussion, the pair
their important characteristics, includ- the participation of regulators, but it will cracked jokes and told a number of stories,
ing sovereign backing and responsibil- also require additional efforts on the part but their real goal was to distill some key
ity. They are thus now being promoted of investment management firms to create leadership lessons that can benefit anyone
more as investment opportunities than appropriately structured products that are working in the business community.
efficient mediums for exchange, and the suited for a broader universe of investors. As Johnson suggested, all leaders in
problems with this fact are apparent. Clayton took particular issue with both business and sports need equal
“If you’re a regulator, you don’t want the current accredited investor rules, parts knowledge and self-confidence,
to see something that is holding itself which haven’t been changed in 40 years, and they need to surround themselves
out to be like a security but which trades though there is legislation in Congress with people who are ready, willing and
like tickets to a Taylor Swift concert,” to do so. “They simply don’t match the able to contribute to collective suc-
he explained. “I think the ‘Swifties’ out current reality of individual investors cess. But great leadership also requires
there who got burned buying tickets will being responsible for their own retire- humility, Johnson said, as well as empa-
agree with me.” ment income, in particular,” he said. thy and, sometimes, an ability to confi-
Clayton spent significant time discuss- dently ignore the doubts of others.
ing the need to “democratize” access to essenTIAL Lessons In LeADersHIP Asked by Reynolds to reflect on “wheth-
private equity investments, which is one Los Angeles Lakers and NBA legend er he was born a leader or whether he
of Apollo Global Management’s biggest Earvin “Magic” Johnson most recently learned to be a leader,” Johnson said the
goals. He also took pains to differentiate grabbed headlines for his role alongside answer in his case is both, but he believes
the SEC’s approach to market regulation major private equity investor Josh Harris the most essential lessons in leadership
during his tenure from that of current SEC in striking an agreement in principle to have to be learned. “I think the basis of my
Chair Gary Gensler, suggesting it is “pretty buy the Washington Commanders NFL ability to lead came from the work ethic
clear that we are in a very [unconstruc- team for $6.05 billion. that my father instilled in me. I grew up
tive] business-skeptical and commercial- The agreement, which is still pending poor in a household with six sisters and
skeptical regulatory environment.” ownership approval and other custom- three brothers, and my father had to have
As to why he thinks more investors ary closing conditions, would represent two or three jobs all the time to put food
should be able to access private equity- the highest price ever paid for a North on the table, but he got it done. He worked
type investment opportunities, he said American professional sports franchise. for General Motors for 30 years and never
the reason is straightforward. “Capital While impressive in its own right, how- missed a day, and he never was late.”
formation now largely comes from out- ever, the deal to acquire the Commanders Johnson recalled that his own first job
side the public markets and the aver- is just the latest accomplishment for was working with his father in a trash-
age investor is barred from those private Johnson during his life “after basketball.” hauling business that he operated for extra
markets in many cases,” Clayton said. “All Johnson sold his shares of the Los income. It didn’t matter that Johnson was
investors should have access to a portfo- Angeles Lakers more than a dozen years still young and had other pressing respon-
lio that looks like a well-managed pension ago, but he remains a minority owner of sibilities in the form of his studies and his

July/August 2023 InvesTmenT ADvIsor 37