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Our experts frequently write blog posts about the findings of the research we are conducting.

Displaying 251-260 out of 694 results

Five Broker-Dealers Ordered to Pay over $10 Million in Restitution for Non-Traded REIT Sales

(Sep 2013)

Back in May, Massachusetts securities regulators ordered five independent broker-dealers to pay over $6 million in fines and restitution for improperly selling non-traded REITs. It also settled separately with another broker-dealer, LPL Financial, for an additional $2.5 million. Just yesterday, Secretary of the Commonwealth William Galvin announced an additional settlement with the same five broker-dealers for an additional $10.75 million in additional restitution for improper sales of...

Risk Retention in Collateralized Loan Obligations

(Sep 2013)

Last week we covered the SEC's proposed risk retention rules for securitized assets such as collateralized debt obligations (CDOs) and mortgage backed securities (MBS). One of the reasons why these types of structured deals are so complex is because they are divided into many different securities, called 'tranches,' with different levels of risk. We explained tranching in our post, What is a CDO, Anyway?

The new proposed rules require sponsors of securitizations to keep at least 5% of each...

Why Do Volatility ETPs Reverse Split?

(Sep 2013)

We still get a lot of questions about VXX, TVIX, and all of the other VIX-related exchange-traded products(ETPs). We've talked before about the persistent loss of value due to negative roll yield, as well as issues surrounding TVIX's suspension of share creations. We've also talked about some of the newer volatility products that attempt to mitigate some of the issues with the older generation of products. We've also analyzed whether VIX-based ETFs could serve as a hedge to equity...

SEC Litigation Releases: Week in Review - August 30th, 2013

(Aug 2013)

SEC Charges Oklahoma Investment Adviser and Cohort with Fraud
August 27, 2013, (Litigation Release No. 22789)
According to the complaint, former investment adviser Larry J. Dearman, Sr. "invested his clients in various businesses that" his close friend, Marya Gray, "owned in Bartlesville, Oklahoma." According to the SEC, Dearman and Gray misled investors "about the safety of the investments and how their funds would be used, telling them, for instance, that investor funds would be used to...

Regulators Soften on Credit Risk Retention Rule

(Aug 2013)

Yesterday financial regulators proposed a revised rule addressing the retention of credit risk for sponsors of securitizations -- see the proposed rule .¹The thought is that by removing the separation between the origination and securitization of loans, lenders will focus more on the quality of loans rather than the quantity, as they would have to keep some 'skin in the game' when structuring asset-backed securities.

The original March 2011 proposal required securitizers to retain at least...

Limit Up/Limit Down Rules and the NYSE

(Aug 2013)

Nearly a year after the "flash crash" of May 6, 2010, the Securities and Exchange Commission (SEC) proposed a "limit up-limit down" mechanism that would limit the trading prices for listed equity securities to within a range near recent prices -- effectively limiting the realizable volatility of the price movements.¹ The proposal called for price bands around the average price over the preceding five-minute period and would prevent execution of trades outside of these bands. The proposal was...

Cat Bonds and Contamination Risk

(Aug 2013)

Many pension funds have struggled to achieve sufficient return on their investments in the current low interest rate environment. Some have begun investing in insurance-linked securities, particularly catastrophe ('cat') bonds. You can find our primer on insurance-linked securities on our blog post, "The Basics of Insurance Linked Securities"; essentially, insurance companies issue cat bonds to transfer the risk of catastrophic losses to investors, meaning cat bond investors suffer losses in...

Morgan Stanley's Excessive Municipal Bond Markups

(Aug 2013)

Yesterday, FINRA fined Morgan Stanley for best execution and for charging excessive markups or markdowns. We have been covering markups extensively, and we have taken the Morgan Stanley municipal bond transactions identified by the FINRA action and applied our markup calculation methodology to calculate the distribution of markups charged by Morgan Stanley.

Let's start with an example. FINRA flagged a customer purchase of $145,000 in a West Virginia municipal bond (CUSIP: 95639RBW8) on...

SEC Litigation Releases: Week in Review - August 23rd, 2013

(Aug 2013)

SEC Settles Claims Against Ebrahim Shabudin Arising from Understated Bank Losses During Financial Crisis
August 22, 2013, (Litigation Release No. 22786)
Earlier this month, the SEC's claims against Ebrahim Shabudin (the former Chief Operating Officer of UCBH Holdings, Inc.) were settled. The SEC "alleges Mr. Shabudin and other defendants concealed losses on loans and other assets from the bank's auditors and delayed the proper reporting of those losses." To settle the charges, Shabudin has...

Morgan Stanley Fined over Excessive Bond Markups

(Aug 2013)

Morgan Stanley has been fined by the Financial Industry Regulatory Authority (FINRA) for "failing to provide best execution in certain customer transactions involving corporate and agency bonds, and failing to provide a fair and reasonable price in certain customer transactions involving municipal bonds" according to today's news release. The story has also been picked up by the Bond Buyer and Law360, and you can find the complete acceptance, waiver and consent .

This action reflects the...

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