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

Displaying 10 out of 44 results for "Structured CDs".

Derivatives in Active ETFs

(Dec 2012)

Over two and a half years ago, the SEC initiated a moratorium on approvals for new ETFs that made extensive use of derivatives such as options and futures contracts. Much of the concern at that time was that derivatives-based ETFs, particularly leveraged, inverse, and futures-based ETFs may not have investor protections or oversight commensurate with their level of risk. Regular readers of this blog know that we have spent a good deal of time discussing those issues in addition to our ...

Structured Products Highlight: Citigroup ELKS Linked to YAHOO!

(Dec 2012)

Today we're highlighting a structured product issued on May 25, 2011 by Citigroup. This product (CUSIP: 17317U501) is an Equity LinKed Security (ELKS) linked to Yahoo! (YHOO).

ELKS are similar to reverse exchangeables in that the notes pay periodic coupons (monthly at an annualized rate of 9.50% in this case) and protect principal on a limited basis (if YHOO's price remains above the $13.08 trigger during the term of the note). In contrast to reverse exchangeables, once a trigger event occurs...

SEC Charges Morgan Keegan Directors with Failing to Oversee Asset Valuations

(Dec 2012)

The SEC has charged eight former Morgan Keegan directors with failing to provide accurate valuations for mortgage-backed securities during the subprime crisis of 2007. We wrote a paper in 2009 explaining the collapse of the RMK bond funds and how they relate to these very same securities.

The mutual funds at issue are 1) RMK High Income Fund, Inc.; 2) RMK Multi-Sector High Income Fund, Inc.; 3) RMK Strategic Income Fund, Inc.; 4) RMK Advantage Income Fund, Inc.; and 5) Morgan Keegan Select...

Structured Products Highlight: JP Morgan Reverse Exchangeable Linked to Ford

(Dec 2012)

Today we're highlighting a structured product issued on January 19, 2012 by JP Morgan. This product (CUSIP: 48125VHZ6) is a Reverse Exchangeable linked to Ford Motor Company (F). Investors who purchased the notes were exposed to the possibility that JP Morgan would default on the obligations spelled out in the note's offering documents.

This particular note offered investors monthly coupons at an annualized rate of 11.25% for the six month term of the note. If, during the term of the notes,...

Attractive Yields and Hidden Risks

(Dec 2012)

The Wall Street Journal had a great piece this weekend concerning the investments some investors are seeking out to find yield in this low interest rate environment. Investors are taking on more and more risk to realize the yield they once found commonplace and this article brings a few examples to the forefront.

The risk investors are taking include credit risk (high-yield/junk bonds), market risk (closed-end funds trading at a premium) or some combination of the two (structured products)....

Importance of Timing in Structured Products

(Nov 2012)

We've been looking through some historical issuances of structured products recently and we happened to come across a peculiar product issued by Morgan Stanley in September 2008. The product (CUSIP: 617483664) offered investors bearish exposure to the S&P 500. In other words, if the S&P 500 level declines as of the valuation date of the notes, then the product would exhibit a positive return.

Not only was the return positive if the S&P 500 went down, but it was leveraged six times -- capped...

Structured Products Highlight: UBS Autocallable Linked to JOY

(Nov 2012)

Today we're highlighting a structured product issued on July 25, 2012 by UBS. This product (CUSIP: 90269T574) is a Trigger Phoenix Autocallable Optimization Security linked to Joy
Global Inc. (JOY). Since this product is issued by UBS, purchasers of the notes were exposed to the possibility that UBS would have been unable to meet the obligations spelled out in the note's offering documents.

This particular note offered investors quarterly coupons (annualized rate of 12.84%) if JOY's stock...

Can Non-Financial Firms Issue Structured Products?

(Nov 2012)

The simple answer is yes. Structured products are for regulatory purposes corporate debt--that's why they are vulnerable to the credit risk of their issuers. In theory, any firm that can issue corporate debt could issue a structured product, and could link that structured product to any underlying asset it choose. In practice, no non-financial firm has done so in the US (to our knowledge), as there hasn't been a compelling reason for them to do so.

But according to Vita Millers at Risk.net, ...

SEC Litigation Releases: Week in Review - November 23rd, 2012

(Nov 2012)

Brian Stoker Found Not Liable
November 21, 2012, (Litigation Release No. 22541)
On July 31, 2012, the United States District Court for the Southern District of New York found Brian H. Stoker, former Citigroup Global Markets Inc. employee, "not liable for violations of the Federal securities laws related to the issuance of a $1 billion collateralized debt obligation (CDO) called Class V Funding III." The SEC did not appeal the verdict, and "the time for appeal has expired." The SEC filed its...

Structured Products Highlight: Buffered SuperTrack Linked to the S&P 500

(Nov 2012)

Today we're highlighting a structured product issued on September 30, 2011 by Barclays. This product (CUSIP: 06738KWL1) is a Buffered SuperTrack Note linked to the Standard & Poor's 500 (S&P 500) index.

This particular note offered investors exposure to the S&P 500 with buffered protection if the index declines over the term of the note. Specifically, if the index level is not more than ten percent below the initial level at maturity, investors receive their entire principal investment. An...

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