The Plaza Group claims in bankruptcy filings that it was undone by recent accounting rules that force private equity partnerships to write down the value of their investments in accordance with market valuations, as opposed to holding them at cost.

FORBES: Private Equity

It's no coincidence that when mark-to-market accounting was modified this spring the equity markets, led by financial companies, took off like rockets from their lows.

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There are a number of different ways of computing capital or equity, but for now we can use the simple accounting definition.

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New accounting rules demand that they start valuing their equity portfolios at market value at the end of this month, which could constrain their ability to pay dividends out of retained earnings.

ECONOMIST: Stockmarkets

For instance, the recent guideline on fair-value accounting, which decrees that companies must show equity holdings at their market value, also contains a provision that allows them to avoid writing down shares if they think that they will soon recover in value.

ECONOMIST: Company accounts

Your five-year return-on-equity figure for HSBC is based on U.K. accounting standards, which are not comparable to the U.S. accounting standards used by Citigroup.

FORBES: Readers Say

Hedge funds, of course, have become a highly desirable customer segment for Wall Street, accounting for 10% of commodities revenue and 30% of equity trading commissions.

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Historically, the general partners of private equity funds just held their portfolio at cost, but last year they were forced by new accounting rules to mark their holdings to market.

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Some private equity firms, like Blackstone, are public companies and are required under SEC rules to have a registered public accounting firm audit.

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