Fears grow over Wall St's appetite for securities-based lending
By: Ben McClannahan, The Financial Times (Jul 2016)
The Financial Times continues to cover the substantial increase in securities-based lending to customers of broker-dealers. Lending has become the primary focus of sales and marketing efforts at retail wirehouses like Merrill Lynch, Morgan Stanley and UBS. Paul Meyer, who has written extensively on the investor protection risks posed by these loans, is quoted today by the Financial Times cautioning about the risks associated SBLs.
Spy Novelist Who Claimed Deception by Morgan Stanley Wins $3.6 Million
By: Mason Braswell, AdvisorHub (Jun 2016)
Mason Braswell's "Spy Novelist Who Claimed Deception by Morgan Stanley Wins $3.6 Million" reports on the financial harm an investor incurred when his broker overstated the value of his investments over a three-year period. Dr. O'Neal testified on liability and damages for the Claimant.
Commissions exposed, adviser stops selling nontraded REITs
By: Ann Marsh, FinancialPlanning.com (Jun 2016)
Ann Marsh's "Commissions exposed, adviser stops selling nontraded REITs" in FinancialPlanning.com discusses SLCG's non-traded REIT research. The article illustrates how disclosing commissions and their impact on the purchase date value of a nontraded REITs helps disinfect this odious business.
Is Your Broker Good or Bad?
By: Jason Zweig, The Wall Street Journal (Apr 2016)
Jason Zweig's "The Intelligent Investor: Is Your Broker Good or Bad?" in this weekend's Wall Street Journal reports on recent published literature on broker misconduct. His article cites SLCG's recently completed analysis of 1.2 million BrokerCheck records. Craig McCann, Mike Yan and Chuan Qin are the principal authors of the study. Their findings are reported in "How Widespread and Predictable is Stock Broker Misconduct?"
The Oil Rout's Surprise Victims
By: Jason Zweig, The Wall Street Journal (Feb 2016)
Jason Zweig's "The Intelligent Investor: "The Oil Rout's Surprise Victims" in this weekend's Wall Street Journal discusses the losses caused by falling oil prices through retail structured products linked to crude oil prices, and to indexes and ETFs of oil and gas producing companies. The article quotes Craig McCann on the complexity of these products and their use as a focused bet rather than as part of a diversified investment strategy.
Market woes prompt regulator to warn on securities-based loans
By: Ben McLannahan, Joe Rennison, Financial Times (Sep 2015)
Ben McLannahan and Joe Rennison's "Market woes prompt regulator to warn on securities-based loans" quotes SLCG's Paul Meyer on the conflicts of interest involved in brokerage firms' extension of securities-based loans. Paul is quoted as saying "While securities-based lending is a low risk and very profitable business for the broker-dealer, the same cannot be said for the borrower. Broker-dealer lending creates conflicts of interest, saddling the customer with risks and potential long-term consequences he or she may not fully understand until the next bear market arrives." Paul's paper on securities-based lending is available on our website.
UBS's Costly Puerto Rican Adventure
By: Sophie Schimansky, Neue Zurcher Zeitung (Aug 2015)
Sophie Schimansky's "UBS's Costly Puerto Rican Adventure" reviews the UBS debacle in Switzerland's largest German-language newspaper. The article quotes SLCG's Craig McCann on the devastating impact UBS's conflicted sale of closed end funds and on the high likelihood that additional arbitrations will continue to be filed for many years to come. For a quick summary of SLCG's research into UBS and Puerto Rico, read our blog post "UBS Puerto Rico's Bond Fund Debacle: What We Know so Far".
Puerto Rico Investors Win Relief From UBS
By: Mike Cherny, The Wall Street Journal (Aug 2015)
Mike Cherny's "Puerto Rico Investors Win Relief From UBS" in the Wall Street Journal reports on a string of arbitration wins by UBS PR customers over the sale of leveraged closed end bond funds. The WSJ article cites SLCG's analysis of the UBS PR funds and quotes Craig McCann.
Non-traded REITs cost investors $50 billion: consultant
By: Ross Kerber, Suzanne Barlyn, Reuters (Jun 2015)
Ross Kerber and Suzanne Barlyn's "Non-traded REITs cost investors $50 billion: consultant" reports the result of SLCG's non-traded REIT research. In "An Empirical Analysis of Non-Traded REITs", Brian Henderson, Joshua Mallett, and Craig McCann found that the non-traded REIT industry has transferred at least $45.5 billion in wealth from investors to sponsors and the brokerage industry. The first 41 non-traded REITs had cost investors $25.5 billion in lost wealth and 40 additional non-traded REITs which had updated their NAVs had cost investors another $20 billion in lost wealth. In "Fiduciary Duties and Non-traded REITs", Craig McCann points out that no advisor with fiduciary duties could recommend a non-traded REIT.
Federal Judge Hands Down 10-Year Sentence To Former Chief Accounting Officer For Beazer Homes USA, Inc.
By: U.S. Attorney's Office, Western District of North Carolina (Apr 2015)
In April 2015, a federal judge in Charlotte, NC handed down a 10-year prison sentence to the former Chief Accounting Officer of Beazer Homes for accounting fraud and obstruction of justice. Dr. O'Neal testified about the losses Beazer Homes shareholders incurred due to the fraud. The Judge adopted Dr. O'Neal's event-study calculations and rejected the competing analysis of defendant's expert witness. In criminal cases, the magnitude of the losses caused by the criminal activity in large part determine the severity of the punishment. The US Department of Justice writes that "the Court emphasized that its sentence was intended to deter others because our 'markets depend on the integrity of accounting officers.'"
