The Securities and Exchange Commission (SEC) issued a press release today announcing that it had removed "credit ratings as eligibility criteria for companies seeking to use 'short form' registration when registering securities for public sale." The SEC unanimously voted for the adoption of this new rule, in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act that encouraged financial regulators to rely...
Bloomberg issued a news release today discussing the topic of a structured products bubble in Wall Street. According Christopher Whalen, managing director of Institutional Risk Analytics, the sale of structured products allows the selling firms to make bets on interest rates. Furthermore, they are illiquid products for which firms are not obligated to make markets and hence provide liquidity when these products might need them...
Preferred stocks have characteristics similar to both debt and equity. Like debt, preferred stocks make fixed or floating dividend payments similar to coupon payments of debt. Like equity, the dividend payments are not an obligation of the issuer and a failure to make dividend payments does not constitute a default. Holders of preferred stocks have claims on the income and assets of the issuing company before common equity...