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

Displaying 11-20 out of 49 results for "Principal Protected Notes".

Investors Bristle at New Structured Product Valuations

(Jun 2013)

Back in February, the SEC issued a letter to structured product issuers that required them to estimate and prominently state the estimated value of the notes to investors. According to Risk.net, as issuers have begun doing so, many investors have "expressed surprise" at how low those valuations are.

However, these valuations should be no surprise to anyone familiar with the structured product literature, which has documented significant discounts for a wide variety of product types. You can...

Higher Expected Returns Only Come from Higher Risk: The Case of 130/30 Strategies

(May 2013)

JP Morgan recently released an "Investment Insight" that puts the spotlight on 130/30 strategies, which are used by several mutual funds and ETFs from a variety of issuers. A 130/30 strategy involves selling short 30% of the assets in a portfolio and using the proceeds to leverage the long securities to 130% of initial assets. The securities that are shorted are expected by the portfolio manager to depreciate during the holding period (overvalued) while the assets that are purchased are...

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...

New FINRA Guidelines for Non-Traded and Private REITs

(May 2013)

In recent months, FINRA has been investigating how non-traded and private real estate investment trusts (REITs) are presented to retail investors. Last week, FINRA alerted broker-dealers that they had uncovered "deficiencies" in how these investments are sold, and issued Regulatory Notice 13-18 "to provide guidance to firms on communications with the public concerning unlisted real estate investment programs, including unlisted real estate investment trusts (REITs) and unlisted direct...

FINRA Fines Merrill Lynch for Failing to Provide Best Execution to Customers

(Apr 2013)

FINRA announced yesterday that it has fined Merrill Lynch more than one million dollars "for failing to provide best execution in certain customer transactions involving non-convertible preferred securities executed on one of its proprietary order management systems (ML BondMarket)" as well as inadequate supervision.

FINRA's Department of Market Regulation found what amounts to a systematic issue in the ML BondMarket software that prevented customer orders from being evaluated at the most...

Major Tenants-in-Common Sponsor Charged with Fraud

(Apr 2013)

Four former executives of DBSI, one of the largest sponsors of tenants-in-common (TIC) interests, have been indicted on 83 counts of securities fraud, wire fraud, mail fraud, and interstate transportation of stolen property. The indictment is seeking approximately $169 million in forfeiture of properties and assets, alleging that the executives misrepresented the financial condition of DBSI to potential investors. The executives named wereformer president Douglas Swenson, general counsel...

Fees on Structured Products Rise as Sales Increase

(Apr 2013)

Kevin Dugan recently reported that fees on structured products linked to stocks have risen to their highest level in three years. In particular Kevin notes that "issuers and underwriters earned $137.7 million in disclosed fees, or 1.95 percent of the $7.08 billion of equity-tied securities" that have a stated commission. Average fees have ranged from less than 1.5% to nearly 2% over the past three years.

The increase in average fees is likely due to the increase in average term for products...

TD Ameritrade Data Suggests Retail Investors Use ETFs in 'Sophisticated Ways'

(Mar 2013)

Exchange-traded funds (ETFs) are increasingly popular among retail investors. ETFs tend to have lower expense ratios than comparable mutual funds, and can be traded intraday like stock, giving them a comparable advantage that has proven attractive. The number of ETF issuers has grown, and that competition has driven down prices in what has become known in the financial press as the "ETF Fee War".

TD Ameritrade has produced an infographic that shows how their clients use ETFs, and the results...

SEC Issues Letter Regarding Structured Product Valuation Disclosures

(Feb 2013)

Bloomberg's Kevin Dugan is reporting that the SEC has issued a letter to issuers of structured products late last week that offers guidance for the disclosures of estimated value in offering documents. The SEC letter addresses the concerns we and others have shared over the potential mispricing of structured products, which can be and are sold to retail investors -- you can read through our research papers on the topic.

The letter confirms that the SEC will require--though it is not clear...

Securities Class Action Filings Decrease in 2012

(Feb 2013)

Earlier this year, Cornerstone Research released 2012 review of Securities Class Action Filings in conjunction with the Stanford Law School -- see the press release. The report notes that the number of federal securities class action filings have decreased in recent years and, in particular, has fallen nearly 20% from 2011 to 2012. For the number of filings over the past sixteen years can be found below (Figure 2 in their report).

Cornerstone attributes the majority of the decline in class...

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