SEC Litigation Releases: Week in Review (Part II) - March 23rd, 2012
(Mar 2012)
Due to the high volume of litigation releases from the Securities and Exchange Commission over the past week, we're spreading this week's review over two posts. This is the second of the two posts.
SEC Settles Litigation with Former Veritas Software Corporation Head of Sales
March 22, 2012, (Litigation Release No. 22304)
The US District Court for the Northern District of California entered a settled final judgment against Paul A. Sallaberry -- former head of sales of Veritas Software...
SEC Litigation Releases: Week in Review (Part I) - March 23rd, 2012
(Mar 2012)
Due to the high volume of litigation releases from the Securities and Exchange Commission over the past week, we're spreading this week's review over two posts. This is the first of the two posts.
Defendant Michael Kimelman Settles SEC Insider Trading Charges
March 20, 2012, (Litigation Release No. 22299)
Michael Kimelman -- formerly a trader a Lighthouse Financial Group, LLC -- received material nonpublic information from an attorney concerning the acquisition of 3Com Corp. and allegedly...
SEC Litigation Releases: Week in Review (Part II) - March 16th, 2012
(Mar 2012)
Due to the high volume of litigation releases from the Securities and Exchange Commission over the past week, we're spreading this week's review over two posts. This is the second of the two posts.
SEC Charges Five with Insider Trading on Confidential Merger Negotiations Between Philadelphia Company and Japanese Firm
March 14, 2012 (Litigation Release No. 22288)
The SEC charged Timothy J. McGee, Michael W. Zirinsky, Robert Zirinsky, and Hong Kong residents Paulo Lam and Marianna sze wan Ho with...
SPIVA Scorecard Year-End 2011
(Mar 2012)
S&P recently released their semiannual report comparing the performance of actively managed mutual funds against their appropriate benchmark indices. The S&P Indices Versus Active Funds (SPIVA) Scorecard contains information the mutual fund industry would likely prefer to be kept quiet.
The Year-End 2011 SPIVA Scorecard reports that "over a five-year horizon[...] a majority of active equity and bond managers in most categories lag comparable benchmark indices." Actively managed mutual funds...
Which Would You Rather Have?
(Mar 2012)
Last month we had a blog post introducing the FINRA Mutual Fund Expense Analyzer tool. In this post we apply it to the 25 largest mutual funds and ETFs measuredby net asset value using data from Morningstar. We assumed for this calculation an initial investment of $1,000 held for five years, and plot the total fees and sales charges over that period against the historical 5 year annualized total return of the fund:
There is no clear linear relationship between returns and fees as depicted in...
Greg Smith Leaves Wall Street
(Mar 2012)
The New York Times published an op-ed by Greg Smith, a Goldman Sachs' Executive Director who is resigning from his job after almost 12 years with the firm because, as he puts it, the firm's culture has veered far from what it was when he first joined the firm. He says in spite of the firm's recent scandals "the interests of the client continue to be sidelined in the way the firm operates and thinks about making money." At SLCG, we have come across many examples of the issues raised by Mr....
SEC Litigation Releases: Week in Review - March 9th, 2012
(Mar 2012)
District Judge Approves SEC Settlement with Koss Corporation and Michael J. Koss, its former CEO and CFO
March 9, 2012, (Litigation Release No. 22279)
In the SEC's October 2011 complaint(Litigation Release No. 22138), the SEC alleged that the Milwaukee, Wisconsin based Koss Corporation had prepared materially inaccurate financial statements from FY 2005-2009. The complaint alleged that, during this period, Sujata Sachdeva (Koss Corporation's former Principal Accounting Officer and Vice...
SLCG Research: Non-Traded REITs
(Mar 2012)
We've posted a new working paper on our website that brings together much of our research related to non-traded Real Estate Investment Trusts (REITs). In it, we discuss the history and structure of non-traded REITs as well as differences between non-traded REITs and other avenues for gaining exposure to real estate. We highlight the dizzying array of fees and conflicts of interest embedded in these companies. We demonstrate that non-traded REITs are often misleadingly valued, heavily...
Hedge Fund Correlation with Broad-Based Indexes Increases Dramatically
(Mar 2012)
As Bank of America-Merrill Lynch Global Research's Mary Ann Bartels showed last year, the correlation of hedge fund monthly returns with broad based stock market indexes has recently hit historic highs. We decided to look into this phenomenon and determine whether or not it is persisting.
In the following plot, we show the monthly returns for the S&P 500 index as well as the Dow Jones Credit Suisse Core Hedge Fund Index (representing an aggregation of several hedge fund investment...
WSJ on Innovation in Commodity ETFs
(Mar 2012)
Yesterday the Wall Street Journal ran an article about recent innovation in the commodity ETF space. Our work on commodity ETFs has focused on their use of constant-maturity rolling futures strategies, which incur a roll yield depending on conditions in the futures markets. Now, according to the WSJ, many ETF issuers are choosing more complex strategies to try to mitigate these and other effects in commodities markets:
Some of these new products use complex formulas to identify commodities...
