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

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Displaying 10 out of 10 results for "CDO".

Research Roundup

(Dec 2013)

For the more academically-inclined reader, here is a brief rundown of recent academic papers we have found interesting. As these are written by others, we do not necessarily agree with or stand by all of their points, so caveat emptor.

Trading Volatility: At What Cost?: The inventor of the original VIX, Robert Whaley, weighs in on volatility exchange-traded products, which he says are "virtually guaranteed to lose money through time." See also our papers on the subject.

Lapse-Based Insurance:...

Risk Retention in Collateralized Loan Obligations

(Sep 2013)

Last week we covered the SEC's proposed risk retention rules for securitized assets such as collateralized debt obligations (CDOs) and mortgage backed securities (MBS). One of the reasons why these types of structured deals are so complex is because they are divided into many different securities, called 'tranches,' with different levels of risk. We explained tranching in our post, What is a CDO, Anyway?

The new proposed rules require sponsors of securitizations to keep at least 5% of each...

Cat Bonds and Contamination Risk

(Aug 2013)

Many pension funds have struggled to achieve sufficient return on their investments in the current low interest rate environment. Some have begun investing in insurance-linked securities, particularly catastrophe ('cat') bonds. You can find our primer on insurance-linked securities on our blog post, "The Basics of Insurance Linked Securities"; essentially, insurance companies issue cat bonds to transfer the risk of catastrophic losses to investors, meaning cat bond investors suffer losses in...

SEC Litigation Releases: Week in Review - June 21st, 2013

(Jun 2013)

SEC Charges San Diego-Based Promoter in Penny Stock Scheme
June 19, 2013, (Litigation Release No. 22730)
According to the complaint, David F. Bahr "artificially increased the trading price and volume" of penny stocks in iTrackr Systems "when he conspired with a purported businessman with access to a network of corrupt brokers." Bahr had arranged the fraudulent purchase of $2.5 million worth of shares in iTrackr with this businessman and "during a test run of their arrangement, Bahr paid a...

Dodging Hedge Fund Requirements: The Case of Mariner Access

(Jun 2013)

Nowadays, there are several ways that retail investors can purchase risky investments which would typically be considered unsuitable. For example, many exchange-traded funds (ETFs) use derivatives to offer investors access to risky asset classes (such as CDOs) or complex options positions (such as covered calls). Since ETFs can be bought and sold like any other listed stock, essentially any investor can now take covered call positions regardless of her understanding of options. There is even...

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...

What Buying a House and Structuring an Asset Backed Security Have in Common

(May 2013)

When you buy a house, it's generally a good idea to get it inspected so you know if there are any expensive problems you might have to pay for after the deal closes. It's also a good idea to make sure that the person inspecting the house be independent, knowledgeable and perhaps most importantly objective -- not paid by or otherwise conflicted with the seller. Otherwise, they might overlook problems to make sure the deal goes through.

Asset backed securities (ABS) -- such as mortgage backed...

Oppenheimer to Pay US Airways $30 Million over Auction Rate Securities

(Feb 2013)

Oppenheimer & Co. has been ordered by a FINRA arbitration panel to pay US Airways $30 million in damages related to the purchase of several series of structured auction rate securities (ARS). The story is being covered by Caitlin Nish at the Wall Street Journal, Bill Singer at Forbes, and Keith Goldberg at Law360. You can find the US Airways v Oppenheimer award on our website.

ARS are debt instruments that paid interest rates that reflect the clearing prices of regular auctions. Oppenheimer...

What is a CDO, Anyway?

(Jan 2013)

We've talked a lot on this blog about collateralized debt obligations (CDOs), including a post just last week about how they might be regaining popularity. We thought it might be worthwhile to step back and explain just what a CDO is and why it is considered such a risky investment.

Part of the complexity just has to do with terminology. CDOs are a type of asset-backed security; so like a derivative, the value of a CDO is linked to the value of another asset. Typically, CDOs are linked to an...

What a CDO 'Resurgence' Might Mean for Investors

(Jan 2013)

Kaitlin Ugolik at Law360 had an article on Wednesday discussing the recent "bump in demand for collateralized debt obligations." CDOs are complex derivatives that pool assets together and split the risk of that portfolio into tranches which are then sold to investors. CDOs have been implicated in the financial crisis of 2008 and have seen a strong drop-off in new issuances since, though that tide may now be changing.
According to the article, some lenders are predicting a large increase in...

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