Bill Luby on VIX-Related Exchange-Traded Products
(Apr 2012)
Bill Luby, who writes at the VIX and More blog and Expiring Monthly: The Options Traders Journal, is one of the most respected voices on all things related to the CBOE S&P 500 Volatility Index, also known as the VIX. We highly recommend anyone interested in the VIX and volatility-related derivates check out his blog, which has a variety of useful analysis and commentary.
Recently there has been a lot of coverage related to TVIX and otherexchange-traded products linked to the VIX. Here at...
Abuse of Municipal Finance in Wisconsin
(Mar 2012)
The Wall Street Journal is reporting that Stifel Financial has settled with five Wisconsin school districts on charges that they misled these municipal investors with their sale of several complex CDOs. This is just another example of the situation outlined in a previous postwherein a municipality or institutional investor was taken advantage of through the sale of inappropriate investments. The settlement involves $22.5 million in cash, plus $154 million in debt forgiveness. SLCG has been...
WSJ: Private-Equity Fund in Valuation Inquiry
(Feb 2012)
There is an article in the Wall Street Journal today concerning the alleged exaggeration of an asset's value in a private-equity fund. From the article:
The potential exaggeration in the [Oppenheimer Global Resource Private Equity Fund LP] grew to more than $4 million, according to documents shared with Oppenheimer investors. The bulk of this markup came as the fund was reaching out to potential investors in the fall of 2009, and helped push the fund's reported internal rate of return to 38%,...
Schwab Sues FINRA RE: Class Action and Consolidated Claims
(Feb 2012)
There has been some buzz on the blogosphere concerning the ongoing dispute between Schwab and FINRA concerning the issue of class action waivers attached to securities products.
FINRA recently alleged that Charles Schwab & Co. violated FINRA rules by including class action waivers in their customer agreements. From their press release:
FINRA's complaint charges that in October 2011, Schwab amended its customer account agreement to include a provision requiring customers to waive their rights...
WSJ on the 'sophisticated investor' defense
(Jan 2012)
The Wall Street Journal's Financial Advisor blog has a new article on the 'sophisticated investor' defense in securities litigation. This defense is typically used by defendants (usually banks or investment houses) in response to claims against them related to suitability of complex investment products. It boils down to the assertion that because a claimant has a high net worth, he or she is capable of understanding and willing to assume the risks of even extraordinarily complex strategies....
NY Times on the Hosier decision
(Jan 2012)
The New York times has an article about the MAT and ASTA products sold by Citigroup that were the subject of a $54.1 million award in Denver last April. SLCG provided expert testimony and analysis for the claimants in this case, including assessing the MAT/ASTA products at issue, and we are excited that the Times has drawn attention to these highly risky investments.
The MAT and ASTA products were hedge funds that implemented a leveraged municipal bond arbitrage strategy. Essentially,...
In the News: Auction Rate Securities
(Dec 2010)
Forbes' blogger Bill Singer narrates the story of Grand Circle LLC.
Grand Circle had brokerage accounts at the Royal Bank of Canada (RBC) and Wachovia. Through the recommendation of representatives at RBC and Wachovia, Grand Circle purchased auction rate securities (ARS). For business-related reasons, Grand Circle opened another brokerage account at CCO Investments Services Corp (CCO). Grand Circle's Investment Policy stated that it wanted safe, liquid and AAA rated securities and that...
