SLCG Economic Consulting's Logo

Resources

Blog

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

Filter by:

Displaying 11-20 out of 23 results for "Excessive Markups".

Update on Inland American Non-Traded REIT

Inland American Real Estate Trust, the largest non-traded real estate investment trust (REIT), has been the subject of intense scrutiny. In many ways, the criticism of Inland American has been representative of the issues endemic to non-traded REITs generally, such as poor dividend coverage, conflicts of interest, excessive payments to affiliates, stale or poorly updated share prices, and other issues we have discussed on this blog and in our research work . While these issues have been...

MSRB Proposes Rule on Muni Bond Markups

Our colleagues' recent paper on municipal bond markups, which showed that retail investors were charged nearly $11 billion in markups from 2005-2013, has generated a lot of attention. In June we spent an entire week covering the background, methodology, findings, and implications of that paper, which we think has important implications for the municipal bond investors.

On Tuesday, the Municipal Securities Rulemaking Board (MSRB) proposed a new "fair-pricing" rulethat could help address the...

Municipal Bonds Trading in ETFs

About a month ago, we spent a full week highlighting research conducted at our firm that shows the degree to which investors are harmed by excessive markups in municipal bond trading. In the paper, our colleagues argue that low-cost improvements in disclosure requirements could largely eliminate these transfers of wealth from taxpayers and investors to the brokerage industry.

After the research was completed, we began thinking about other ways investors gain exposure to municipal bonds. For...

FINRA's Market Data Center

FINRA has a number of useful web-based tools on their website. We mention their BrokerCheck tool quite often, as it allows investors to check on the professional background and disciplinary history of any particular broker or firm registered with the agency. Another very useful tool is their Market Data Center, which provides a wide variety of market data for free.

Perhaps the most useful aspect of the Market Data Center is the the TRACE (Trade Reporting and Compliance Engine) database. TRACE...

FINRA Fines StateTrust for Charging Unfair Prices in Fraudulent Bond Transactions

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...

Muni Markup Week Wrap Up

Last Friday evening we posted a comprehensive report on municipal bond mark-ups. This week we've had several posts covering topics within our report. We're wrapping up the week with an example which illustrates some of our observations.

In February 2005 the City of Carlsbad issued $33,085,000 in tax exempt bonds underwritten by a Stone & Youngberg. This small San Francisco-based brokerage firm specialized in municipal finance and was recently bought by Stifel Nicholas. The Offering Circular...

Markup Calculation Methodology

Our study looks at markups and markdowns implied by EMMA trade data. My colleagues have shown an example of how we calculate the markups, but I wanted to illustrate the methodology used to handle the more complex cases that arose when analyzing the trade data.

There were effectively four cases that we needed to address. The first case occurs when inter-dealer trades occur on the same business day as the customer trade. In that case we computed the volume weighted average price (VWAP) of the...

Alternative Ways to Gain Municipal Bond Exposure

We've been covering municipal bonds, with a focus on markups, this week on the blog. So far we've discussed some basics, given an example of an excessive markup and introduced SLCG research on excessive markups in municipal bonds . Given that retail investors may be charged excessive markups when purchasing municipal bonds directly, it may make sense for them to purchase municipal bonds indirectly.

Jason Zweig has written a great follow-up to his coverage of the muni markups issue with a...

An Example of an Excessive Muni Markup

This week we've been discussing excessive markups in the municipal bond market. Now that we've outlined what excessive markups are, you might be wondering what such markups actually look like in the EMMA data.

The following figure shows the October 6, 2009 EMMA trading activity in a $6.54 million State of California municipal bond issued in 2009. A customer purchased $1,000,000 of the issue at $113.80, paying $3.507 more than the average inter-dealer price for trades of similar size that...

Retail Investors and the Municipal Bond Market

This week, we will be discussing the buying and selling of municipal bonds by brokers on behalf of retail investors. But to start, let's address some basic questions about the municipal bond market.

What are municipal bonds and how are they traded?

Municipal bonds are simply bonds issued by a state and local government or authorities. Municipal bonds can be general obligation bonds, meaning they are not used to fund specific projects, or they could be issued to finance a new highway, a public...

23 Results

Display: