Thursday, April 7, 2011

Contested Pricings List

The capacity for price manipulation or price inflation presents a major challenge for the market to overcome, especially in the illiquid markets where live trading data are seldom made available to the general public. Like "ratings shopping," investors may be incentivized towards seeking the highest price, or most accomodating price provider, for their securities.

We will continue to maintain this growing database of situations in which parties disagree as to the prices used, or pricing practices employed.

  1. Sept. 2014: SEC Finds Deficiencies at Hedge Funds: Shortcomings Include Valuation 'Flip Flopping'

  2. Sept. 2014: Pimco ETF Draws Probe by SEC: Regulators Are Probing Whether Returns Were Artificially Inflated

  3. Aug. 2014: FINRA Fines Citigroup Global Markets: "Citigroup priced more than 7,200 customer transactions inferior to the NBBO because the firm's proprietary BondsDirect order execution system (BondsDirect) used a faulty pricing logic"

  4. Feb. 2014: SEC Looking at How Alternative Funds Value Investments

  5. Feb. 2014: Danske Bank Faces Broader Probe of Bond Price Fixing in 2009: "The trades, conducted in February and March 2009, raised mortgage bond prices in a way that “harmed customers at Realkredit Danmark A/S,” Danske’s home-loan unit, the crime squad said."

  6. Jan. 2014: Federal Probe Targets Banks Over Bonds: Inquiry Looks for Deliberate Mispricing of Mortgage Bonds Key to Financial Crisis

  7. Aug. 2013: 2 more targeted in JPMorgan's London Whale case: "Prosecutors in the office of U.S. Attorney Preet Bharara in the Southern District said Martin-Artajo and Grout manipulated and inflated the value of position marks in the Synthetic Credit Portfolio, or SCP, which the government said had been very profitable for the bank's chief investment office."

  8. Dec. 2012: Deutsche hid up to $12bn losses, say staff

  9. Nov. 2012: KCAP fund, execs settle charges of overstating assets.

  10. May 2012: FINRA Fines Citigroup Global Markets $3.5 Million for Providing Inaccurate Performance Data Related to Subprime Securitizations: "Citigroup failed to supervise mortgage-backed securities pricing because it lacked procedures to verify the pricing of these securities and did not sufficiently document the steps taken to assess the reasonableness of traders' prices."

  11. May 2012: JPMorgan CIO Swaps Pricing Said To Differ From Bank

  12. May 2012: Ex-UBS Trader Sues After Firing for Mispricing Securities

  13. Feb. 2012: SEC Looking Into PE Firms’ Valuation of Assets

  14. Feb. 2012: Massachusetts Subpoenas Bank of America Over CLOs: examining whether Bank of America knowingly overvalued the assets in the portfolios in order to get the loans off its books

  15. Feb. 2012: Ex-Credit Suisse traders face US charges: Case relates to alleged CDO mispricing

  16. Jan. 2012: SEC Charges UBS Global Asset Management for Pricing Violations in Mutual Fund Portfolios)

  17. Nov. 2011: PwC and KPMG criticised over audits (of their clients' valuations of mortgage-related securities)

  18. Oct. 2011: Oversight board faults Deloitte audits

  19. July 2011: Polygon Faces Accusations It Used Tetragon For Cash

  20. April 2011: Report says Goldman duped clients on CDO prices

  21. April 2011: Wachovia cheated investors by inflating markups, SEC says

  22. March 2011: Buffett’s Berkshire Questioned on Accounting

  23. Feb. 2011: What Vikram Pandit Knew, and When He Knew It

  24. Feb. 2011: Mutual Funds' Muni-Debt Prices Are Questioned

  25. Oct. 2010: SEC Continues Crackdown on Overvaluations of Hedge Fund Assets

  26. Aug. 2010: Merrill's Risk Disclosure Dodges Are Unearthed

  27. May 2010: HK watchdog slaps fine on Merrill units

  28. April 2010: Legal Woes for Regions Financial

  29. Nov. 2009: Ambac Misstates Financials to Meet Minimums

  30. July 2009: Under Fire, NIR Group Switches Valuation Firms

  31. June 2009: Evergreen Pays Over $40 Million to Settle SEC Charges that it Overvalued Mortgage-Backed Investments

  32. April 2009: FHLB Executive Who Left Cites Securities Valuations

  33. Aug. 2008: "Large Number" of Banks Miss-Marked Assets, U.K. Regulator Says

  34. Aug. 2008: Financial Services Authority’s "Dear CEO: Valuation and Product Control" Letter

  35. July 2008: The Subprime Cleanup Intensifies: Did UBS Improperly Book Mortgage Prices? Several Probes Expand

  36. Feb. 2008: IN RE REGIONS MORGAN KEEGAN SECURITIES, DERIVATIVE and ERISA LITIGATION:"(g) The Fund's Board of Directors was not discharging its legal responsibilities with respect to “fair valuation” of the Fund's assets and had abdicated these responsibilities to the Fund's investment advisor, which had an inherent and undisclosed conflict of interest because its compensation was based on the amount at which which the Fund's assets were valued"

  37. Feb. 2008: AIG's bad accounting day

  38. Feb. 2008: OCC Supervisory Letter to Citi (identifies as one of two key concerns "CDO Valuation and Risk Management in the Capital Markets & Banking Group")

  39. Oct. 2007: Ex-RBC trader says colleagues mismarked bonds

  40. Oct. 2007: Pricing Tactics Of Hedge Funds Under Spotlight

  41. Aug. 2007: BNP Paribas halted withdrawals from three investment funds because it couldn't "fairly" value their holdings

  42. Aug. 2007: Goldman Disputes AIG Valuations and Office of Thrift Supervision Instructs AIG to Revisit Modeling Assumptions

  43. Jan. 2006: Deutsche suspends trader over £30 million 'cover-up’

  44. June 2002: An Analysis of Allied Capital:Questions of Valuation Technique

  45. Aug. 1994: Behind the Kidder Scandal: How Profit Was Created on Paper

Let us know if there are any we're missing.

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