
Eleven Ordinary Twenty-Somethings With $250B Riding on Their Lives - mxfh
https://www.bloomberg.com/news/articles/2019-08-09/meet-the-spy-11-kids-with-250-billion-riding-on-their-lives
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wmf
I wonder if this is related to the rule against perpetuities; basically in
some jurisdictions you can't have a trust that exists forever even though that
doesn't really matter for an ETF.

[https://en.wikipedia.org/wiki/Rule_against_perpetuities](https://en.wikipedia.org/wiki/Rule_against_perpetuities)

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huac
yep, it is, new york is one of the states where that rule applies

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Overtonwindow
This is really confusing, I wish Matt Levine would take it up. Could someone
perhaps explain exactly what’s going on here? I get that they use the names of
these children, but they didn’t say if there was more to it. If it’s just the
names it could be anyone. How does it tie specifically to each child?

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perl4ever
He did. It was in today's column.

In describing what would happen if all of them died and the trust had to be
shut down:

"...money could move from SPY I to SPY II by passing a basket of S&P 500
stocks from SPY I to a bank trading desk, and from that trading desk to SPY
II, without ever selling it in the market..."

"...the assets of SPY I would pretty efficiently move over to SPY II, and the
price of the underlying stocks would not be affected. Some retail investors
wouldn’t want to move, because the move would trigger taxable gains for them,
but over 20 years that problem would mostly go away as they cash out
naturally. By 2039, the trust’s accelerated end date, SPY I would be pretty
small and the real S&P 500 index ETF action would be in SPY II. No one would
have to dump stock along the way, and the short-selling supervillain would
never be rewarded for his evil deeds."

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__john
> SPY as we know it will cease to be on Jan. 22, 2118, or 20 years “after the
> death of the last survivor of the eleven persons” -- whichever occurs first.
> The structure doesn’t provide those people with a financial interest in SPY.

If SPY ceased to exist what would be the effect on the markets?

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wmf
People would just shift their holdings to SPY2 or something before the
expiration and there would be no effect.

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busterarm
What if they all died without warning, on the same day?

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kenneth
Then you still have 20 years to switch everyone over.

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edoo
I'd be concerned that there was some tradeable pattern to the end of such a
fund that may translate to an increased risk of death for the named parties.

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perl4ever
According to Matt Levine, the underlying stocks would not have to be bought
and sold if the trust ended and a new one was created. So the trusts wouldn't
incur taxes and it shouldn't affect the price of the stocks.

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olliej
Can someone post a tldr for those who can’t read the article proper?

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gota
"Thanks to a quirk in the legal structure used to set up the SPDR S&P 500 ETF
Trust, known as SPY, more than $250 billion rests on the longevity of 11
ordinary kids born between May 1990 and January 1993."

By law funds require a determines termination. They tied it to the death of
"random" kids. The fund will end in 2118 or 20 years after the last of these
eleven kids (chosen, "voluntarily" by their parents, as token people) dies

It' relatively clear and straightforward, but the article does not explain
what happens when the fund terminates.

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dhosek
There's only one way to find out. And if these kids start dying mysterious
deaths, we'll know that someone has decided to go that route.

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Overtonwindow
I was just thinking this would make a great plot of a spy novel. Since it
began so long ago, I think Robert Litell would be perfect

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User23
I totally got a Robert Ludlum vibe.

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webninja
I hate it when you submit a story and come to find that someone else already
submitted it before you. /rant

Of course it’s a good story.

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stewgoldman
Eleven ordinary twenty-somethings??? They're not ordinary at all. They are Spy
Kids.

