Posts belonging to Category Credit Default Swaps

Is Morgan Stanley Telling the Truth about its Condition?


Liquidity concerns are swirling around Morgan Stanley. Worries of defaults by European banks or governments are eroding the value of its assets and derivatives contracts. Hedge funds are so concerned that they have begun to withdraw cash from their prime brokerage accounts at Morgan Stanley. In the face of these developments, Morgan Stanley is telling […]

Most Alternative Investments Carry Huge Risks


Investors should use extreme caution before investing in alternative investments. Alternative investments have become the popular “investment du jour” but these investments are fraught with risks. Simply stated, alternative investments are not the panacea that so-called experts represent them to be. For the reasons discussed below, investors need to be very skeptical of any recommendation […]

Storm Clouds Over Morgan Stanley


Morgan Stanley’s credit default swaps and bond yields are climbing, signaling that investors are concerned about the firm’s creditworthiness. The price of a credit default swap on Morgan Stanley represents the price demanded to insure its debt against default. The higher the price, the greater the risk the bank will default, in the eyes of […]

Do Hedge Funds Create and Burst Bubbles for their Own Benefit?


In recent years, hedge funds have become dominant players in the investment markets and the evidence suggests that hedge fund trading (which regularly involves thousands, if not hundreds of thousands, of shares) has been a significant contributing factor to market volatility.

SEC Refuses to Take Action Against Senior Executives in Structured Product Cases


SEC Enforcement Chief Robert Khuzami recently stated that the SEC’s decision not to charge top executives of Wall Street banks with wrongdoing in cases involving structured products was appropriate, according to Suzanne Barlyn’s Wall Street Journal article entitled “SEC: Structured-Product Cases Haven’t Reached Top Bank Officers.” According to Mr. Khuzami, top executives were not involved […]

Economic Armegeddon Ahead?


“Nation Goes on Its Merry Way to Ruin” (WSJ) by Pam Luecke, the Donald W. Reynolds professor of business journalism at Washington and Lee University in Lexington, Va., provides her take on Gretchen Morgenson’s and Joshua Rosner’s “Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led To Economic Armegeddon.”

The Real Truth Regarding Some of Wall Street’s Subprime Shenanigans Begins to Emerge


J.P. Morgan Securities LLC has agreed to pay $153.6 million to settle SEC charges that it misled investors in a complex “built to fail” mortgage securities transaction just as the housing market was starting to plummet.

The Subprime Mortgage Mess: How the American Dream Turned into a Nightmare


Best-selling “Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led To Economic Armegeddon,” by Gretchen Morgenson and Joshua Rosner, “calls out greedy guys behind mortgage mess,” according to a USA Today book review by Kathryn Caravan. See also “Home Truths,” by James Freeman of the Wall Street Journal. Both reviews provide examples of how the […]

Magnetar CDO Deals Haunt Wall Street Firms


The Securities and Exchange Commission is broadening its investigation into the world of “built to fail” collateralized debt obligations (CDOs) by looking at Merrill Lynch’s CDO business, according to articles by Marian Wang of Pro Publica (“Merrill Lynch Investigated for CDO Deal Involving Magnetar”) and Kara Scannell of the Financial Times (“SEC Probes $1.5 Billion […]

Institutional Investors Are Filing Big Claims Against Financial Services Firms


Defense-minded institutions that have long remained on the sidelines when defrauded have finally woken up and are jumping on the plaintiff-recovery bandwagon as they seek to protect themselves against a variety of wrongdoing, according to Vanessa O’Connell’s Wall Street Journal article entitled “Company Lawyers Sniff Out Revenue.” These actions include waves of claims against Wall […]