Pension Purchase Agreements; The worst "investment" in the world?
(Oct 2015)
In recent years, platforms for buying and selling pension benefit payments have been created and gained traction. Voyager Financial Group (VFG) operated one of the largest and most active exchanges for buying and selling pension payments. There is limited information available on the size of this market because these firms have operated under the radar of securities regulators.
In pension benefit agreements, a pensioner agrees to turn over a specific number of their future pension benefit...
The Recent Market Turmoil Spells Trouble for "Auto-liquidators" like Interactive Brokers
(Aug 2015)
Interactive Brokers Group, Inc. (IB) caters to active traders including those who trade futures and options. These active traders' accounts typically are subject to "portfolio margin" requirements which we have written about at length. 1 IB requires its customers to agree to have IB auto-liquidate positions when accounts are in a margin deficit.
IB's auto-liquidation procedures were the focus of a FINRA arbitration earlier this year in which the Claimant, Glen Lyon Long-Term Options, LP,...
UBS of Puerto Rico Continues to Wreak Havoc on Clients
(Aug 2015)
In October 2014, UBS Puerto Rico settled with the Office of the Commissioner of Financial Institutions for the Commonwealth of Puerto Rico ("OCFI") over UBS's lack of compliance and supervision as some brokers recommended some "mostly senior, low net worth investors with conservative investment profiles" use non-purpose loans to further concentrate their accounts in UBS PR closed-end bond funds. The UBS-OCFI settlement is available to view on our website.
As part of the settlement, UBS paid...
Why Citigroup Paid the SEC $180 Million Over MAT/ASTA
(Aug 2015)
I. Introduction
This week Citigroup paid $180 million to the SEC to settle allegations that Citigroup improperly sold high risk hedge funds known as MAT, ASTA and Falcon. The SEC Order is available to view online.
The SEC Order makes clear that Citigroup did not effectively monitor the portfolio manager or the sales force as it sold billions of dollars of high risk MAT ASTA funds with false and misleading sales presentations. In the end, Citigroup lost hundreds of wealthy clients and likely...
The Worst Investment in the World! Behringer Harvard's Priority Income Fund
(Jun 2015)
I. Introduction
What could be worse than a non-traded REIT? Well, REIT-sponsor Behringer Harvard has managed to create something even worse than a non-traded REIT: The Priority Income Fund. On May 9, 2013, Behringer Harvard and the manager of publicly traded BDCs, Prospect Capital Management, announced the initial public offering for their new joint-effort Priority Senior Secured Income Fund (PSSI) now renamed Priority Income Fund.i
The best thing that can be said of the Priority Income Fund...
A Non-traded REIT Investor Fights Back
(Jun 2015)
On June 5, 2015, I wrote that American Realty Capital's latest listing of a non-traded REIT was further evidence of the harm caused by sponsors of non-traded REITs. I also pointed out that, contrary to the common pattern in non-traded REIT listings, Schorsch and ARC used their control of the non-traded REIT version of GNL to tie the hands of shareholders and management in the subsequent GNL traded REIT and to opportunistically transfer wealth to themselves. I pointed out that similar...
Nicolas Schorsch and American Realty Capital Lay Another Egg
(Jun 2015)
GNL: American Realty Capital Lays Another Egg
On Tuesday, non-traded REIT American Realty Capital Global Trust Inc. - rechristened Global Net Lease, Inc. - began trading on the NYSE under the ticker GNL. GNL is at least the 42nd non-traded REIT to have listed, or merged into or been acquired by another REIT since 1997 and adds to the mounting wealth toll non-traded REITs have extracted from unsophisticated investors.
My co-authors and I have determined that the non-traded REIT industry has...
Oil and Gas DPPs From Just Two Sponsors Have Caused $3.7 Billion in Losses
(Feb 2015)
We have written extensively about direct participation programs, or DPPs. See our blog posts on non-traded REITs and our discussion about equipment leasing DPPs. Oil and gas DPPs are another strain of the DPP epidemic: illiquid exposure to an existing underlying asset, loaded with confiscatory fees, conflicts of interest and unnecessary risk.
Oil and gas DPPs use some of investors' money to drill and operate oil and gas wells. Oil and gas DPPs are sponsored and managed either by investment...
UBS Puerto Rico's Bond Fund Debacle: What We Know so Far
(Feb 2015)
Over the past year, we've posted a dozen short commentaries to our blog post here. We thought it would be helpful to summarize what we know so far. This summary and our prior UBS Puerto Rico blog posts are available in Spanish. You can find all the Spanish-language blog posts by clicking here.
We discussed the national exposure of the UBS Puerto Rico losses in October 2013 in Trouble in Paradise: UBS Puerto Rico Bond Fund Investors Hit Hard. The losses only got worse thereafter. In calendar...
Lo que Sabemos hasta Ahora de la Debacle de los Fondos de Bonos UBS Puerto Rico
(Feb 2015)
Durante el último año, hemos posteado alrededor de una docena de artículos cortos en nuestro blog (aquí). Pensamos que sería útil resumir lo que sabemos hasta la fecha. Este resumen está disponible en inglés presionando "In English" en la parte superior de esta página. También tenemos las entradas anteriores relacionadas a UBS Puerto Rico en inglés. Todas estas entradas pueden ser halladas aquí.
Nuestro artículo Peligro en la Isla del Encanto: Inversionistas de UBS Puerto Rico Sufren...
