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Research Papers

Our experts have published extensively in peer-reviewed journals. Pre-publication versions of these papers plus other working papers are available below.

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Displaying 10 out of 69 results

Impact of Zoom on FINRA Claimants

By: Craig McCann, Chuan Qin

SLCG presents a new study on the impacts that Zoom and other virtual meeting platforms have on the process of FINRA hearings, citing evidence that the newly updated process has a negative effect on those who are claiming.

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

By: Craig McCann, Regina Meng, Edward O'Neal

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...

Puerto Rico Securities Arbitration Settlements and Awards Likely to Exceed $1.25 Billion (Updated May 15, 2019)

By: Craig McCann, Edward O'Neal, Chuan Qin and Mike Yan

SLCG releases its updated Puerto Rico Securities Arbitration Report showing over $600 million paid out so far in settlements and awards with a similar amount likely to be paid out in coming years as a result of brokerage firm customers losses in Puerto Rico.

Rating Brokerage Firms by Their Complaint Histories Rather Than by Their Brokers' Histories

By: Craig McCann, Chuan Qin and Mike Yan

In our previous research, we ranked brokerage firms based on the proportion of their brokers on December 31, 2015 who had been associated with at least one resolved customer complaint. That approach assigns a higher ranking to a firm if a larger proportion of its current brokers have one or more resolved customer complaint in their career, regardless whether the complaints occurred at their current employer or at a prior employer.

Our new research ranks brokerage firms based on the...

Puerto Rico Securities Arbitration Settlements and Awards Sure to Exceed $1 Billion (Updated November 15, 2018)

By: Craig McCann, Edward O'Neal, Chuan Qin and Mike Yan

In 2013, a shrinking economy and the government's loss of continued access to capital markets necessary to make interest payments, refinance principal coming due and to fund an unsustainable government deficit caused Puerto Rico tax exempt bond prices to fall substantially.

Puerto Rico brokerage firms' customers held poorly diversified securities accounts, concentrated in Puerto Rico municipal bonds or closed end funds that held leveraged portfolios of Puerto Rico municipal bonds. Often these...

Structured Products and the Mischief of Self-Indexing

By: Geng Deng, Craig McCann and Mike Yan

In recent years, investment banks have issued structured products linked to indexes they create rather than just linking to standardized indexes from Standard & Poor's. In doing so, the issuers create additional difficulties for retail investors to understand these, sometimes complex, investments. We illustrate the potential conflicts of interest created with structured products linked to proprietary volatility indexes although the conflicts are present in other proprietary index based...

How Widespread and Predictable is Stock Broker Misconduct?

By: Craig McCann, Chuan Qin, and Mike Yan

In this paper we reconcile widely diverging recent estimates of broker misconduct. Qureshi and Sokobin report that 1.3% of current and past brokers are associated with awards or settlements in excess of a threshold amount. Egan, Matvos, and Seru find that 7.8% of current and former brokers have financial misconduct disclosures including customer complaints, awards, and settlements.

We replicate and extend the analysis of broker misconduct in these studies. Qureshi and Sokobin arrive at...

Craig McCann's NASAA 2015 Presentation, Investments Through Time

By: Craig McCann

Investments Through Time: The Evolution of Investment Products and How They are Sold.

Securities-Based Lending

By: Paul Meyer

A perfect storm of soaring equity values and historically low interest rates has sparked a borrowing binge among securities investors. Securities-based loans ("SBLs") are a very attractive product for the broker-dealers who market them. However, SBLs impose substantial risks on borrowers. These risks are easy to overlook in a buoyant market but will eventually wreak havoc on the financial wellbeing of investors who are not prepared to withstand the next bear market. In this paper, Paul Meyer...

Fiduciary Duties and Non-traded REITs

By: Craig McCann

A summary of SLCG's analysis of investor returns in 81 non-traded REITs. Investors are at least $45.5 billion worse off as a result of investing in the 81 non-traded REITs compared to investing in a diversified portfolio of traded REITs. Investors in non-traded REITs over the past 25 years would have earned as much or more investing in short and intermediate term US Treasury securities without bearing the risks and illiquidity of non-traded REITs. More than half of the non-traded REITs'...

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