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

Displaying 271-280 out of 709 results

Limit Up/Limit Down Rules and the NYSE

(Aug 2013)

Nearly a year after the "flash crash" of May 6, 2010, the Securities and Exchange Commission (SEC) proposed a "limit up-limit down" mechanism that would limit the trading prices for listed equity securities to within a range near recent prices -- effectively limiting the realizable volatility of the price movements.¹ The proposal called for price bands around the average price over the preceding five-minute period and would prevent execution of trades outside of these bands. The proposal was...

Cat Bonds and Contamination Risk

(Aug 2013)

Many pension funds have struggled to achieve sufficient return on their investments in the current low interest rate environment. Some have begun investing in insurance-linked securities, particularly catastrophe ('cat') bonds. You can find our primer on insurance-linked securities on our blog post, "The Basics of Insurance Linked Securities"; essentially, insurance companies issue cat bonds to transfer the risk of catastrophic losses to investors, meaning cat bond investors suffer losses in...

Morgan Stanley's Excessive Municipal Bond Markups

(Aug 2013)

Yesterday, FINRA fined Morgan Stanley for best execution and for charging excessive markups or markdowns. We have been covering markups extensively, and we have taken the Morgan Stanley municipal bond transactions identified by the FINRA action and applied our markup calculation methodology to calculate the distribution of markups charged by Morgan Stanley.

Let's start with an example. FINRA flagged a customer purchase of $145,000 in a West Virginia municipal bond (CUSIP: 95639RBW8) on...

SEC Litigation Releases: Week in Review - August 23rd, 2013

(Aug 2013)

SEC Settles Claims Against Ebrahim Shabudin Arising from Understated Bank Losses During Financial Crisis
August 22, 2013, (Litigation Release No. 22786)
Earlier this month, the SEC's claims against Ebrahim Shabudin (the former Chief Operating Officer of UCBH Holdings, Inc.) were settled. The SEC "alleges Mr. Shabudin and other defendants concealed losses on loans and other assets from the bank's auditors and delayed the proper reporting of those losses." To settle the charges, Shabudin has...

Morgan Stanley Fined over Excessive Bond Markups

(Aug 2013)

Morgan Stanley has been fined by the Financial Industry Regulatory Authority (FINRA) for "failing to provide best execution in certain customer transactions involving corporate and agency bonds, and failing to provide a fair and reasonable price in certain customer transactions involving municipal bonds" according to today's news release. The story has also been picked up by the Bond Buyer and Law360, and you can find the complete acceptance, waiver and consent .

This action reflects the...

Update on Inland American Non-Traded REIT

(Aug 2013)

Inland American Real Estate Trust, the largest non-traded real estate investment trust (REIT), has been the subject of intense scrutiny. In many ways, the criticism of Inland American has been representative of the issues endemic to non-traded REITs generally, such as poor dividend coverage, conflicts of interest, excessive payments to affiliates, stale or poorly updated share prices, and other issues we have discussed on this blog and in our research work . While these issues have been...

Falcone the First To Admit Guilt Under New SEC Settlement Policy

(Aug 2013)

On Monday, Philip Falcone and Harbinger Capital Partners, LLC, the hedge fund he founded in 2001, agreed to a settlement with the Securities and Exchange Commission (SEC) that in addition to an $18 million penalty included an admission of wrongdoing.¹ This is the first high-profile settlement with an admission of guilt since SEC Chairman Mary Jo White said the commission would seek more admissions of guilt rather than continue its longstanding policy of allowing defendants to 'neither admit...

Banks Water Down Loan Terms in Quest for Growth

(Aug 2013)

The Global Association of Risk Professionals (GARP) is reporting that banks are watering down terms of new loans under competitive pressure. For example, some banks are increasing the length of amortization from the usual 15 years to the 25 years, others are decreasing required debt-service coverage from 1.25 to as low as 1 times cash flow while still others are waiving cancellation/prepayment fees.

The relaxation of loan standards is not unique to the commercial loan industry. Recently,...

SEC Litigation Releases: Week in Review - August 16th, 2013

(Aug 2013)

SEC Obtains Final Judgment Against Conrad M. Black
August 15, 2013, (Litigation Release No. 22781)
According to the complaint, Conrad M. Black, former Chief Executive Officer of Hollinger International, Inc., "fraudulently diverted money from Hollinger International to himself and other corporate insiders in the form of purported non-competition payments in the PMG Acquisition and Forum Communications Company newspaper sale transactions." Additionally, Black allegedly "made misstatements and...

Do Leveraged ETFs Increase Stock Market Volatility?

(Aug 2013)

Leveraged exchange-traded funds (LETFs) are controversial investments. Because they can be leveraged as much as 3x, and can be linked to highly volatile underlying assets, their daily price movement is typically very dramatic. Also, LETFs tend to lose value over time if their underlying assets are relatively volatile due to rebalancing effects, something we've covered in our blog post "Leveraged ETFs", as well as in our research papers, "Leveraged ETFs, Holding Periods and Investment...

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