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

Displaying 41-50 out of 140 results for "ERS".

FINRA Fines StateTrust for Charging Unfair Prices in Fraudulent Bond Transactions

(Jun 2013)

We've been discussing markups a lot on the blog recently -- including an entire week devoted to markups in municipal bonds. Yesterday FINRA announced that it fined StateTrust Investments and their head trader, Jose Luis Turnes, for charging excessive markups and markdowns on hundreds of corporate bond transactions.¹ The letter of acceptance, waiver and consent (AWC) is available to view online.

According to FINRA, StateTrust charged prices customers much more, or paid them much less, than the...

SEC Commissioners Vote Unanimously on Money-Market Reform Measures

(Jun 2013)

The SEC voted on Wednesday on changes to rules governing money market funds (MMFs). As we discussed on Tuesday, MMFs are considered low risk, low return investments similar to bank accounts, but experienced 'runs' during the financial collapse of 2008 that helped freeze financial markets. The SEC's new rules hope to prevent such runs by changing how MMFs report their assets.

As widely suspected, the changes target MMFs favored by large institutional investors (dubbed 'prime funds'). While...

FINRA Fines Wells Fargo and Banc of America Over Unsuitable Sales of Floating-Rate Bank Loan Funds

(Jun 2013)

Yesterday, the Financial Industry Regulatory Authority (FINRA) announced fines totalling more than $2.1 million levied against Wells Fargo and Banc of America. In addition, FINRA has ordered the two institutions to pay restitution in excess $3 million to customers who suffered "losses incurred from unsuitable sales of floating-rate bank loan funds."

A floating-rate bank loan fund is a mutual fund that mainly invests in floating-rate high-yield senior secured loans. The floating-rate on the...

SEC to Vote on New Money Market Fund Rules

(Jun 2013)

Tomorrow, the Securities and Exchange Commission will vote on new rules pertaining to the $2.6 trillion money market fund (MMF) industry. The SEC hopes that the new rules will safegaurd against future runs on MMFs, such as those that occurred during the financial crisis after the collapse of Lehman Brothers. A "run on" MMFs occurs when many investors (or a few very large investors) attempt to redeem their shares in near unison, resulting in significant liquidations of MMF holdings.

A money...

Investors Bristle at New Structured Product Valuations

(Jun 2013)

Back in February, the SEC issued a letter to structured product issuers that required them to estimate and prominently state the estimated value of the notes to investors. According to Risk.net, as issuers have begun doing so, many investors have "expressed surprise" at how low those valuations are.

However, these valuations should be no surprise to anyone familiar with the structured product literature, which has documented significant discounts for a wide variety of product types. You can...

Massachusetts Fines Five Brokerage Firms for Sale of Non-Traded REITs

(May 2013)

Secretary of the Commonwealth of Massachusetts William Galvin, who has previously come out swinging on behalf of investors in both warehoused CLOs as well as leveraged and inverse ETFs, announced yesterday that the state has settled with five independent brokerage firms regarding improper sales of non-traded REITs. Non-traded REITs are pooled real estate investments that have become notorious for high fees, lack of liquidity, and numerous potential conflicts of interest, as we detail in our...

SEC Charges South Miami with Defrauding Investors

(May 2013)

Yesterday the Securities and Exchange Commission (SEC) charged the City of South Miami with defrauding investors over the tax-exempt status of some municipal offerings.

In 2002, the City of South Florida obtained access to tax-exempt financing through a pooled conduit municipal bond issued by the Florida Municipal Loan Council (FMLC) to fund the construction of a mixed-use retail and parking structure in the city's commercial district.* The 2002 FMLC bond offering can be found online. The...

Higher Expected Returns Only Come from Higher Risk: The Case of 130/30 Strategies

(May 2013)

JP Morgan recently released an "Investment Insight" that puts the spotlight on 130/30 strategies, which are used by several mutual funds and ETFs from a variety of issuers. A 130/30 strategy involves selling short 30% of the assets in a portfolio and using the proceeds to leverage the long securities to 130% of initial assets. The securities that are shorted are expected by the portfolio manager to depreciate during the holding period (overvalued) while the assets that are purchased are...

Fitch Rolls Out New Ratings Indenture Abstract

(May 2013)

It is looking more and more like collateralized debt obligations (CDOs) and other asset-backed securities -- the 'toxic' assets highlighted as some of the worst excesses of the financial crisis -- are back. And while the agencies that rate asset-backed securities are still at the center of the debate over the validity of these investments, at least one of them is trying to improve its explanation of their labyrinthine terms and conditions.

Fitch has recently published the first example of...

New FINRA Guidelines for Non-Traded and Private REITs

(May 2013)

In recent months, FINRA has been investigating how non-traded and private real estate investment trusts (REITs) are presented to retail investors. Last week, FINRA alerted broker-dealers that they had uncovered "deficiencies" in how these investments are sold, and issued Regulatory Notice 13-18 "to provide guidance to firms on communications with the public concerning unlisted real estate investment programs, including unlisted real estate investment trusts (REITs) and unlisted direct...

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