Enforcement Actions: Week in Review - July 17th, 2015
(Jul 2015)
SEC ENFORCEMENT ACTIONS
SEC Announces Settlement With Cooperator in Grand Central Post-It Notes Insider Trading Case
July 13, 2015 (Litigation Release No. 143)
The SEC announced a settlement with Frank Tamayo for cooperating in a continuing insider trading investigation where illegal information was passed via Post-It notes at Grand Central Terminal. Tamayo was alleged to distributing received tips from a law firm clerk to a stockbroker that he would meet up with at Grand Central Terminal,...
The Worst Investment in the World! Behringer Harvard's Priority Income Fund
(Jun 2015)
I. Introduction
What could be worse than a non-traded REIT? Well, REIT-sponsor Behringer Harvard has managed to create something even worse than a non-traded REIT: The Priority Income Fund. On May 9, 2013, Behringer Harvard and the manager of publicly traded BDCs, Prospect Capital Management, announced the initial public offering for their new joint-effort Priority Senior Secured Income Fund (PSSI) now renamed Priority Income Fund.i
The best thing that can be said of the Priority Income Fund...
A Non-traded REIT Investor Fights Back
(Jun 2015)
On June 5, 2015, I wrote that American Realty Capital's latest listing of a non-traded REIT was further evidence of the harm caused by sponsors of non-traded REITs. I also pointed out that, contrary to the common pattern in non-traded REIT listings, Schorsch and ARC used their control of the non-traded REIT version of GNL to tie the hands of shareholders and management in the subsequent GNL traded REIT and to opportunistically transfer wealth to themselves. I pointed out that similar...
Nicolas Schorsch and American Realty Capital Lay Another Egg
(Jun 2015)
GNL: American Realty Capital Lays Another Egg
On Tuesday, non-traded REIT American Realty Capital Global Trust Inc. - rechristened Global Net Lease, Inc. - began trading on the NYSE under the ticker GNL. GNL is at least the 42nd non-traded REIT to have listed, or merged into or been acquired by another REIT since 1997 and adds to the mounting wealth toll non-traded REITs have extracted from unsophisticated investors.
My co-authors and I have determined that the non-traded REIT industry has...
Enforcement Actions: Week in Review - May 29th, 2015
(May 2015)
SEC ENFORCEMENT ACTIONS
SEC Charges Deutsche Bank With Misstating Financial Reports During Financial Crisis
May 26, 2015 (Litigation Release No. 99)
Deutsche Bank AG has agreed to pay a $55 million penalty to settle charges that they overvalued a portfolio of derivatives by failing to properly value their "gap risk". The derivatives portfolio in question contained "Leveraged Super Senior" (LSS) trades that Deutsche Bank used in order to buy protection against credit default losses. The...
Enforcement Actions: Week in Review - April 10th, 2015
(Apr 2015)
SEC ENFORCEMENT ACTIONS
SEC Charges Firms and Individuals for Defrauding Investors in Cellular Licensing Scheme
April 6, 2015 (Litigation Release No. 57)
Twelve companies and six individuals have been charged with defrauding investors in a scheme involving falsely advertised securities based on licenses for cellular spectrum bands. The alleged orchestrators of the scheme are David Alcorn and Kent Maerki, cofounders of Janus Spectrum LLC. The SEC alleges that third-party fundraisers sold...
Oil and Gas DPPs From Just Two Sponsors Have Caused $3.7 Billion in Losses
(Feb 2015)
We have written extensively about direct participation programs, or DPPs. See our blog posts on non-traded REITs and our discussion about equipment leasing DPPs. Oil and gas DPPs are another strain of the DPP epidemic: illiquid exposure to an existing underlying asset, loaded with confiscatory fees, conflicts of interest and unnecessary risk.
Oil and gas DPPs use some of investors' money to drill and operate oil and gas wells. Oil and gas DPPs are sponsored and managed either by investment...
UBS Puerto Rico's Bond Fund Debacle: What We Know so Far
(Feb 2015)
Over the past year, we've posted a dozen short commentaries to our blog post here. We thought it would be helpful to summarize what we know so far. This summary and our prior UBS Puerto Rico blog posts are available in Spanish. You can find all the Spanish-language blog posts by clicking here.
We discussed the national exposure of the UBS Puerto Rico losses in October 2013 in Trouble in Paradise: UBS Puerto Rico Bond Fund Investors Hit Hard. The losses only got worse thereafter. In calendar...
Lo que Sabemos hasta Ahora de la Debacle de los Fondos de Bonos UBS Puerto Rico
(Feb 2015)
Durante el último año, hemos posteado alrededor de una docena de artículos cortos en nuestro blog (aquí). Pensamos que sería útil resumir lo que sabemos hasta la fecha. Este resumen está disponible en inglés presionando "In English" en la parte superior de esta página. También tenemos las entradas anteriores relacionadas a UBS Puerto Rico en inglés. Todas estas entradas pueden ser halladas aquí.
Nuestro artículo Peligro en la Isla del Encanto: Inversionistas de UBS Puerto Rico Sufren...
