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

Displaying 21-30 out of 48 results for "Structured CDs".

FINRA Fines Wells Fargo and Banc of America Over Unsuitable Sales of Floating-Rate Bank Loan Funds

(Jun 2013)

Yesterday, the Financial Industry Regulatory Authority (FINRA) announced fines totalling more than $2.1 million levied against Wells Fargo and Banc of America. In addition, FINRA has ordered the two institutions to pay restitution in excess $3 million to customers who suffered "losses incurred from unsuitable sales of floating-rate bank loan funds."

A floating-rate bank loan fund is a mutual fund that mainly invests in floating-rate high-yield senior secured loans. The floating-rate on the...

Investors Bristle at New Structured Product Valuations

(Jun 2013)

Back in February, the SEC issued a letter to structured product issuers that required them to estimate and prominently state the estimated value of the notes to investors. According to Risk.net, as issuers have begun doing so, many investors have "expressed surprise" at how low those valuations are.

However, these valuations should be no surprise to anyone familiar with the structured product literature, which has documented significant discounts for a wide variety of product types. You can...

Investors Returning to Capital-at-Risk Products

(May 2013)

Yakob Peterseil of Risk.net recently noted that "[b]anks are boosting issuance of leveraged notes linked to US equity indexes and notes that pay out when yield curves steepen." According to the article, reverse convertibles and buffered notes are seeing a resurgence as investors begin to be more optimistic about stock market growth. In addition, principal-protected structures like structured certificates of deposit and principal-protected notesare falling out of favor as attractive terms are...

Fitch Rolls Out New Ratings Indenture Abstract

(May 2013)

It is looking more and more like collateralized debt obligations (CDOs) and other asset-backed securities -- the 'toxic' assets highlighted as some of the worst excesses of the financial crisis -- are back. And while the agencies that rate asset-backed securities are still at the center of the debate over the validity of these investments, at least one of them is trying to improve its explanation of their labyrinthine terms and conditions.

Fitch has recently published the first example of...

FINRA, SEC Issue Investor Alert on Pension and Structured Settlement Income Streams

(May 2013)

Last week, both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) issued investor alerts concerning pension and structured settlement income streams. The SEC's investor bulletin and FINRA's investor alert can be found online. We haven't discussed the potential problems surrounding pension or structured settlement income streams before, but these regulatory notices highlight some of the potential issues that we think are important for...

Update on Apple-Linked Structured Products

(May 2013)

A few months ago, SLCG issued a working paper that studied the decline in value of Apple-linked structured products. Jason Zweig of the Wall Street Journal also wrote a piece about these findings, most notably that Apple's stock price decline had serious repercussions in the structured product market. Apple's stock price has continued to fall and we recently updated the paper to show how this decline is still affecting investors in structured products.*

Since reaching $700 in September of...

Credit Spread Futures and the Futurization of CDS

(Apr 2013)

Yesterday S&P Dow Jones Indices announced the launch of three credit spread indices based upon constituents of the S&P 500. The indices are part of a suite of indices that "are designed to track the credit default swap market for global corporate credits, including those in distinct Global Industry Classification Standard (GICS®) sectors and sub-industries".*

S&P Dow Jones licensed the indices to the electronic exchange trueEX-- "the world's first CFTC-designated, Dodd-Frank compliant...

Fees on Structured Products Rise as Sales Increase

(Apr 2013)

Kevin Dugan recently reported that fees on structured products linked to stocks have risen to their highest level in three years. In particular Kevin notes that "issuers and underwriters earned $137.7 million in disclosed fees, or 1.95 percent of the $7.08 billion of equity-tied securities" that have a stated commission. Average fees have ranged from less than 1.5% to nearly 2% over the past three years.

The increase in average fees is likely due to the increase in average term for products...

Barclays' Structured Product Linked to a Basket of ETFs and Indexes

(Mar 2013)

RISK.net recently posted an article entitled "IWM urges investors to think about risk-adjusted returns" in the structured products portion of their website. The article describes in detail a Barclays product for which Institute for WealthManagement, LLC (IWM) served as the basket selection agent. Interestingly, the basket is composed mostly of ETFs, which have been appearing in structured products more frequently as the ETF industry itself has become more mature. IWM's Matt Medeiros talked...

Evolution of Absolute Return Structured Products

(Feb 2013)

From 2006 to 2009, a type of structured product known as an absolute return barrier note (ARBN) was issued by a variety of major investment banks. ARBNs are interesting because they are linked to the absolute value of the return on an underlying, not just its return, and therefore are considered non-directional bets. We've done a lot of work on ARBNs here at SLCG, including a research paper that values a sample of ARBNs and finds they are worth on average 4.5% less than their purchase price...

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