Blog

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

Displaying 51-60 out of 67 results for "Interest Rate Swaps".

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%,...

In the News: Structured CDs

(Feb 2012)

Bloomberg News reported this week that FINRA is investigating a relatively new type of product that ties the returns of certificates of deposit (CDs) to derivatives. These products are known generally as 'Structured CDs' (SCDs) but also go by 'Index-Linked CDs', 'Equity-Linked CDs' or 'Market-Linked CDs'. There have also been news stories concerning Market-Linked CDs issued by Wells-Fargo and Equity-Linked CDs issued by Goldman Sachs in recent years.

SCDs have existed since the late 1980s,...

Could Credit Rating Agencies be Held Accountable This Time?

(Feb 2012)

A recent wall street journal article reports that U.S. lawmakers plan to introduce a bill that would require top credit-rating firms to review their credit ratings on a quarterly basis, hoping that more frequent reviews would increase the accuracy of their ratings and help identify potential problems.

According to Wall Street Journal, the bill would "amend the Securities Exchange Act of 1934 to require the chief executive officer of each [credit-rating firm] to attest, quarterly, to the...

A Wipeout That Didn't Have to Happen

(Feb 2012)

This weekend the New York Times' Gretchen Morgenson wrote an article about the recent FINRA award against Banc of America Securities for their LCM VII CLO. We have blogged about this case before, and have put together a research paper describing the underlying issue of warehousing assets in structured credit derivatives. We are very grateful to the New York Times and Gretchen Morgenson for giving this story the attention it deserves.

The fundamental problem with structured credit and many...

Freddie Mac, complex derivatives, and one huge conflict of interest

(Jan 2012)

There have been many news reports lately describing the difficulty homeowners have had in refinancing their mortgages. Many decry the strict requirements imposed on them by Fannie Mae and Freddie Mac, the massive taxpayer-owned-but-ostensibly-nongovernmental mortgage financing firms. Well today, NPR and ProPublica are reporting that Freddie Mac bet billions that many homeowners would not be able to refinance their mortgages.

Now that's a conflict of interest. Other outlets have begun to...

President and CIO of Direxion admits that leveraged ETFs are not appropriate for most investors

(Jan 2012)

Today Seeking Alpha posted an interview with Dan O'Neill, President and CIO of Direxion, one of the first and best known issuers of leveraged ETFs. Readers familiar with our work on leveraged ETFs know that we feel these products are almost always unsuitable for retail investors.

Surprisingly enough, Mr. O'Neill agrees completely:

The leveraged indexed ETFs are used by very tactical investors, and so there we have bull and bear funds. They have daily betas, which means that essentially...

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: UBS & Morgan Stanley Subpoenaed over Reverse Convertibles

(Jul 2011)

UBS, Morgan Stanley Subpoenaed Over Reverse Convertibles

Bloomberg news reported today that the state of Georgia had sent subpoenas requesting for data and other information from UBS AG, Morgan Stanley and Ameriprise Financial Inc.. The state is investigating whether these brokerage firms violated the securities laws of Georgia in their sale of reverse convertibles to investors of Georgia.

Sales of reverse convertibles have grown, and investors who are being sold these structured...

In the News: Auction Rate Securities Purchased by US Airways

(Jun 2011)

Forbes' blogger Bill Singer narrates the story of US Airways. Registered with Lehman Brothers at the time, three individuals were ordered to pay US Airways $15 million in damages for making unsuitable recommendations and unauthorized purchases of auction rate securities (ARS) and for the failure to provide proper supervision over the transactions of ARS made on behalf of US Airways.

ARS are long-term floating rate securities whose coupon payments are determined at auctions that are...

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