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Regulation D Offerings Summary Statistics1

In installments, we are going to publish our analysis of the market for Reg D securities. This first installment reports summary statistics based on our review of all Form D reports filed with the SEC from January 1, 2009 through July 31, 2022. We present the number, dollar amount raised and other characteristics of the securities offered under Reg D in aggregate and broken out by issuer's industry and year of sale.

Future installments will (1) report summary statistics for broker-sold...

UBS's Yield Enhancement Strategy ("YES") Returns - and then the Losses - Were Caused by Equity Market Exposure

UBS marketed YES as market-neutral based on a combination of four options is sometimes referred to as an "Iron Condor". UBS accounts subjected to YES treatment suffered losses of 12% to 14% in December 2018 when the S&P 500 dropped 9.2% because the overlay was more than 100%.

In this paper the authors we explain the option basics necessary to understand the YES strategy and illustrate how UBS actually implemented the strategy with predictably disastrous results. They also present how UBS...

YES Strategies: Know to say no

In recent years, low yields in the bond market and low volatility in the equity markets have combined to give brokerage firms the excuse to develop and sell "Yield Enhancement Strategies (YES)" to retail investors. These strategies almost always consist of selling options on the S&P 500. The sale of an option garners a premium but places the seller (the retail investor) in a short option position. Being short on a call or put option is a risky place to be. In the best-case scenario, the...

Material Misrepresentations in XIV's Prospectus Led to $700 Million in Losses

Executive Summary

Credit Suisse's XIV Exchange Traded Note (ETN) linked to the inverse of short-term VIX futures prices lost 97% of its value or approximately $2 billion in a single day on February 5, 2018. Credit Suisse announced the following morning that it would redeem all outstanding XIV shares at the Closing Indicative Value on February 15, 2018.1

Figure 1 reports the daily closing price for XIV from its inception in November 2010 to its demise in February 2018. The run-up in 2017...

Investors "Strangled" by LJM Preservation and Growth Fund (LJMIX)

The stock market began the month of February on a roller-coaster. During the 6 trading days from Friday, February 2nd to Friday, February 9th, the Dow Jones Industrials had intraday swings of at least 330 points each day. On four of those six days the Dow incurred 1,000 point swings.

Amidst the dramatic market swings two weeks ago, the LJM Preservation and Growth Fund stands out. The Fund plummeted over 80% (from a price of $10.34 to $1.94) in two days. See Figure 1.

Figure 1. LJM Preservation...

UBS and Santander's Role in Underwriting Employee Retirement System Bonds

We've written extensively about the UBS Puerto Rico Closed End Funds. These funds were concentrated in the riskiest subset of Puerto Rico municipal bonds - uninsured bonds with little or no market outside of the proprietary UBS funds. Our prior posts on Puerto Rico can be found on our website.

In this post we revisit the Employee Retirement System's 2008 ERS Series B offering to highlight Santander's role in this ill-fated deal. The Series B bonds were the second of three ERS offerings. The...

Puerto Rico Municipal Bond Returns and Sunspots


Economists use a statistical procedure called regression analysis to determine whether there is a relationship between economic variables. For example, a labor economist might use regression analysis to determine whether there is a relationship between salaries and education after controlling for differences in job tenure and geographic region. An antitrust economist might use regression analysis to determine whether an attempted collusion in the airline industry effected prices...

Non-Traded REIT Conflicts Run Amok: VRM I, VRM II and MVP, MVP II


SLCG has written extensively about pervasive conflicts of interest in non-traded REITs arising because a non-traded REIT's sponsor, advisor, selling agents, and major suppliers are often affiliated entities that benefit more from creating the non-traded REIT than from running the REIT profitably. See our blog posts on REITs. SLCG economists have also published peer-reviewed articles on non-traded REITs, including An Empirical Analysis of Non-Traded REITsi.

A collection of...

Santander's First Puerto Rico Family of Funds: Same Defects, Similar Losses as UBS Puerto Rico and Popular Funds


We have previously posted our extensive research into UBS Financial Services of Puerto Rico's closed end funds - some of which were co-managed and sold by Popular.

A summary of our UBS posts as of February 12, 2015 can be downloaded by clicking UBS Puerto Rico's Bond Fund Debacle: What We Know so Far. That summary is also available in Spanish by clicking Lo que Sabemos hasta Ahora de la Debacle de los Fondos de Bonos UBS Puerto Rico.

Two subsequent UBS posts can be accessed by...

Extreme (Expungement) Makeover: Is Scrubbing a 30-Year Record Really Legal?

We have written extensively about problems with FINRA's BrokerCheck system. See our blog posts on BrokerCheck.

Others have written about expungement abuses. For example, see Susan Antilla's "The Unbelievable Story of One Broker and Her Firm Fighting to Clean Her Tarnished Record".

Two weeks ago a FINRA panel rendered an extraordinary expungement award, recommending expungement of 8 awards and 3 settlements. The award in Joseph Anthony La Ferla, Jr. vs. UBS Financial Services Inc. can be viewed...

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