| |
JT
Note: The reality
was more complicated than my quotes captured. “Trading” of
CDO products amounted to CDO hawala, opaque trading and pricing
activity designed to make it difficult to track prices and tranches.
This activity was widespread, and investigations should also be
widespread. Malfeasance should be tracked back to the mortgage
lending level. I give some examples in my book on the financial
meltdown, Dear Mr. Buffett: What an Investor Learns 1,269 Miles
from Wall Street (Wiley, 2009).
Note that Goldman Sachs, UBS, CORAL, and Remo (Dresdner) bought
protection from AIG on TRIAX deals. One would want to examine the
inner portfolios of all the CDOs to see how many contained TRIAX
deals in a less obvious way. Of course, there are other CDOs and
CDO managers on the list of deals hedged with AIG that also merit
thorough investigation.
SEC
Charges ICP Asset Management in CDO Fraud Case
Reuters - June
21, 2010
by Emily
Chasen (edited by Matthew Goldstein)
Janet
Tavakoli, a Chicago-based derivatives and
structured finance consultant, said she expects
the SEC to pursue charges against other CDO collateral
managers. Tavakoli, who wrote a textbook on CDOs
that is often referred to in the securities industry,
said the allegations of self-dealing involving
ICP are not an isolated event in the CDO industry.
For instance, she said it was not uncommon for
[investment banks and cronies] to trade pieces,
or tranches, of CDOs between themselves simply
to get marks in order to "prop up prices."
"
One of the claims a lot of managers make is that
the disclaimers in CDO documents said they may
have interest that runs contrary to that of their
investors," said Tavakoli. "But if
a manager has a fiduciary responsibility they
can't simply do something in direct opposition
to their investors' interests. Boilerplate disclosure
can be problematic."
Janet
Tavakoli is the president of Tavakoli
Structured Finance, a Chicago-based firm
that provides consulting to financial institutions
and institutional investors. Ms. Tavakoli
has more than 20 years
of experience in senior investment banking
positions, trading, structuring and marketing
structured financial products. She
is a former adjunct professor of derivatives
at the University of Chicago's Graduate
School of Business. She is the author of: Credit
Derivatives & Synthetic
Structures (John
Wiley & Sons,
1998, 2001), Structured
Finance & Collateralized
Debt Obligations (John
Wiley & Sons,
2008).
Janet
Tavakoli's book on the global financial meltdown is Dear
Mr. Buffett: What An Investor
Learns 1,269 Miles From
Wall Street (Wiley 2009)
Clients
of Tavakoli Structured Finance
have the benefit of proprietary consultation, which is
not available in any other paid or public forum. Clients
also commission proprietary research and analysis.
TSF
makes some information available to the general public. Please
click here for other articles.
|
