Material Misrepresentations in XIV's Prospectus Led to $700 Million in Losses
(Mar 2018)
Executive Summary
Credit Suisse's XIV Exchange Traded Note (ETN) linked to the inverse of short-term VIX futures prices lost 97% of its value or approximately $2 billion in a single day on February 5, 2018. Credit Suisse announced the following morning that it would redeem all outstanding XIV shares at the Closing Indicative Value on February 15, 2018.1
Figure 1 reports the daily closing price for XIV from its inception in November 2010 to its demise in February 2018. The run-up in 2017...
Investors "Strangled" by LJM Preservation and Growth Fund (LJMIX)
(Feb 2018)
The stock market began the month of February on a roller-coaster. During the 6 trading days from Friday, February 2nd to Friday, February 9th, the Dow Jones Industrials had intraday swings of at least 330 points each day. On four of those six days the Dow incurred 1,000 point swings.
Amidst the dramatic market swings two weeks ago, the LJM Preservation and Growth Fund stands out. The Fund plummeted over 80% (from a price of $10.34 to $1.94) in two days. See Figure 1.
Figure 1. LJM Preservation...
UBS and Santander's Role in Underwriting Employee Retirement System Bonds
(May 2017)
We've written extensively about the UBS Puerto Rico Closed End Funds. These funds were concentrated in the riskiest subset of Puerto Rico municipal bonds - uninsured bonds with little or no market outside of the proprietary UBS funds. Our prior posts on Puerto Rico can be found on our website.
In this post we revisit the Employee Retirement System's 2008 ERS Series B offering to highlight Santander's role in this ill-fated deal. The Series B bonds were the second of three ERS offerings. The...
This is why UBS paid the SEC $15 Million over Reverse Convertible Structured Products
(Sep 2016)
The Securities and Exchange Commission today announced a $15 million settlement with UBS over structured products linked to high volatility stocks today. The SEC press release announcing the settlement and its Order Instituting Proceedings are available on the SEC website. This post explains the underlying notes and why UBS may have paid the SEC a substantial settlement over sales practices related to UBS's reverse convertible notes ("RCNs").
UBS sold thousands of structured notes to retail...
This is Why Merrill Lynch Paid the SEC and FINRA $15 million over Bank of America's VOL Index-linked Structured Products.
(Jun 2016)
The Securities and Exchange Commission yesterday announced a settlement with Merrill Lynch over structured products linked to Bank of America's proprietary investable volatility index based on VIX Future contracts ("VOL Index"). The SEC press release announcing the settlement and its Order Instituting Proceedings are available on the SEC website. The companion FINRA settlement press releaseand AWC are available on the FINRA website. Bank of America published its VOL Index in 2010 and shortly...
Investors Lose Over $7 Billion in SandRidge Energy Stock and Notes
(May 2016)
In recent months, investors have lost billions of dollars as a result of their investments in SandRidge Energy, Inc. stock, notes and bonds. Sandridge is involved in the exploration and production of oil and natural gas in the continental United States with some interests in the Gulf of Mexico.
SandRidge's stock price has lost 99% of its value since 2014, erasing more than $4 billion of market capitalization. In addition to near complete losses to SandRidge stockholders, investors have lost...
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...
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...
