Welcome to Tenancies-in-Common (TIC) Week on the SLCG Blog
(Oct 2013)
Today, SLCG posted a new research paper, Large Sample Valuations of Tenancies in Common . In it, we value 194 TICs, totaling $2.2 billion in equity and representing approximately 17% of the TIC industry from 2004 to 2009. Our paper complements our earlier research on TICs ("What is a TIC Worth?" and "Private Placement Real Estate Valuation"), and is the most extensive empirical study of TICs to date. This week we will be summarizing the results of our research in a series of blog posts. But...
SEC Litigation Releases: Week in Review - October 25th, 2013
(Oct 2013)
Jury Finds Mark Cuban Not Liable for Insider Trading
October 23, 2013, (Litigation Release No. 22855)
Last week, "a nine-person federal jury found Mark Cuban not liable for insider trading" in Mamma.com securities.
SEC Obtains Final Judgment Against New Jersey-Based Consultants to Chinese Reverse Merger Companies
October 23, 2013, (Litigation Release No. 22854)
A final judgment was entered against Huakang Zhou (a/k/a David Zhou) and Warner Technology and Investment Corporation for their alleged...
SEC Issues Proposal on Crowdfunding
(Oct 2013)
Yesterday, the Securities and Exchange Commission (SEC) issued proposed rules on crowdfunding to regulate the offer and sale of crowdfunding securities. The press release for the proposed rules can be found on the SEC website. These proposed regulations are meant to fulfill the SEC's requirements under Title III of the JOBS Act . We have previously discussed the JOBS Act crowdfunding provisions in the context of real estate investments, but the proposed rules cover all types of crowdfunded...
Just How Risky Are Leveraged and Inverse ETFs?
(Oct 2013)
Leveraged and inverse exchange-traded funds (ETFs) are some of the most volatile securities traded in public markets. They are designed to track a specific index, except multiplying daily return of the index by a positive (leveraged) or negative (inverse leveraged) factor. The 'daily' part is important: leveraged and inverse ETFs do not track the leveraged or inverse return of the index for any period longer than a single day due to portfolio rebalancing. You can find more details about...
SEC Litigation Releases: Week in Review - October 18th, 2013
(Oct 2013)
Court Enters Final Judgment by Consent Against Defendant Ronald Baldwin, Jr.
October 17, 2013, (Litigation Release No. 22847)
A final judgment was entered against Ronald Baldwin, Jr., former CFO of JBI, Inc., for his alleged involvement in "a scheme to commit securities and accounting fraud in 2009." Previously, the SEC charged JBI, Inc. and its CEO, John Bordynuik for their alleged involvement in the scheme. Baldwin consented to the judgment which permanently enjoins him from future...
FINRA's Conflict of Interest Report
(Oct 2013)
On Monday, the Financial Industry Regulatory Authority (FINRA) published their Report on Conflicts of Interest "to better understand how [a number of a large firms] manage conflicts of interest and to identify effective practices to manage those conflicts." The report details observations made in connection with FINRA's targeted examination letter in July 2012 as well as in-person meetings resulting from that letter.
The report makes it clear that a well-defined framework is necessary for...
Another Non-Traded REIT Lists Shares, Revealing Losses
(Oct 2013)
Shares of non-traded real estate investment trusts (REITs) were sold in large amounts during the real estate bubble of 2005-2007. Without an observable trading price, sponsors simply fixed the share price of non-traded REITs at $10 per share. As real estate markets have collapsed and now begun to recover, it has been difficult to ascertain just how much those $10 shares have changed in value. Non-traded REIT sponsors are now required to estimate per-share net asset values, which have...
The JOBS Act and Private Placement Advertising
(Oct 2013)
As per rules adopted in line with the 2012 Jumpstart Our Business Startups Act (JOBS Act), hedge funds and other private placements can now advertise to the general public. We have been covering this issue extensively here on the blog. While many sources suggested that this would unleash an immediate flood of new marketing, several sources have noted that there has in fact been remarkably few hedge fund advertisements so far.
Why? There could be several reasons. The first is that while the...
Fidelity to Launch Mutual Fund Based on Hedge Fund Strategy
(Oct 2013)
We see it again and again: complex investment strategies packaged into traditionally conservative investments. We have seen corporate debt linked to exotic derivatives positions (structured products), exchange-traded products linked tocomplex futures positions (commodities and volatility ETPs), variable annuities linked to options strategies (structured product based variable annuities), and even certificates of deposit with complex payoff structures (structured CDs). Now, we are seeing more...
SEC Litigation Releases: Week in Review - October 11th, 2013
(Oct 2013)
Previously Unknown Insider Traders in Heinz Agree to $5 Million Settlement
October 10, 2013, (Litigation Release No. 22841)
According to the complaint, Rodrigo Terpins traded on nonpublic information concerning H.J. Heinz that he learned from his brother, Michel Terpins. Rodrigo Terpins made his trades through "a Cayman Islands-based entity named Alpine Swift that holds assets for one of their family members." The Terpins brothers and Alpine Swift, which was named as a relief defendant, have...
