Posts belonging to Category CDOs



CDOs Haunt UBS

 

Swiss banking giant UBS AG is reported to be engaged in settlement discussions with the U.S. Securities and Exchange Commission regarding its structuring and underwriting of an allegedly fraudulent mortgage bond deal.  The SEC has alleged that UBS defrauded clients that invested over $748 million in notes linked to a CDO known as ACA ABS […]

Alternative Investments – Often Tainted by Sales Practice Abuses

 

Investors in search of fixed income have poured money into a variety of alternative investments, including nontraded real estate investment trusts (REITs).  Alternative investments encompass most investments other than traditional stocks and bonds and mutual funds that hold stocks and/or bonds.  There are three basic clusters of problems that investors who are considering these products […]

Wall Street Firms Scam Each Other

 

Citigroup, one bank that has been accused of scamming investors in CDO transactions, appears to have been scammed by another Wall Street Bank, UBS, that engaged in similar activity. The U.S. Department of Justice’s recent lawsuit against Standard & Poor’s has identified dozens of collateralized debt obligations (CDOs) that were allegedly given the highest AAA […]

Insurance Companies Raise Red Flags on Certain Alternative Investments

 

The recent actions of errors and omissions insurance carriers should serve as a major red flag to investors. Many of these carriers are refusing to issue coverage for sales of certain alternative investments. In other words, these carriers have determined that the risk of loss associated with the sale of certain alternative investments is too […]

Is Time Running Out on Criminal Prosecutions Against Wall Street ?

 

Federal prosecutors may be about to run out of time to file criminal charges against Wall Street participants for their role in the financial crisis. Charges for most federal offenses, including securities fraud, must be filed within five years of the offense, experts say. The subprime lending that played a significant role in the crisis […]

Wells Fargo Fined for Selling Unsuitable Investments to Municipalities and Non-Profits

 

Wells Fargo agreed to pay more than $6.5 million to settle SEC charges that it sold commercial paper backed by mortgage securities and collateralized-debt obligations to municipalities, nonprofit institutions and other customers without first understanding the substantial risks of those securities. The securities were unsuitable because the investors had a low risk tolerance. Three of […]

Why Simply ‘Looking Into’ Wall Street’s Failure To Perform Adequate Due Diligence Isn’t Enough

 

The Securities and Exchange Commission has identified broker-dealer due diligence as an area of high risk. Before recommending any investment, a brokerage firm is required by law to have a reasonable basis for believing the investment is suitable for customers to whom the investment is recommended, and for understanding all the material facts (the pros […]

Chicago Professors Argue That Governmental Approval Should Be Required For Wall Street’s Exotic Financial Products

 

Wall Street is peddling snake oil ? new financial products that are the equivalent of bottles of medicine with labels like “Dr. Bartlett’s Beneficent Balm ? Boon to Mankind” ? and they should be regulated as such, according to University of Chicago professors Eric A. Posner and E. Glen Weyl. The FDA protects consumers from […]

Second Circuit Court Of Appeals: Greed Not A Sufficient Motive For Fraud

 

A federal appeals court has upheld a district court’s dismissal of a securities fraud case involving the sale of a collateralized debt obligation (CDO). The CDO, named Davis Square, was collateralized by residential mortgage-backed securities and underwritten by Goldman Sachs in 2006 (“Goldman Sachs Wins Appeal of Ruling Dismissing CDO Suit,” by Bob Van Voris, […]

Wall Street Compensation Systems are the Roots of Many Evils

 

Could Wall Street’s role in creating the recent financial crisis boil down to something as simple as a conditioned reflex? Apparently so, according to William D. Cohan, a former investment banker. Cohen writes: Wall Street “rewards bankers and traders for the revenue they generate by constantly selling whatever comes across their desks, regardless of its […]