{"id":10544,"date":"2010-04-20T20:57:33","date_gmt":"2010-04-21T00:57:33","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=10544"},"modified":"2010-04-20T20:57:33","modified_gmt":"2010-04-21T00:57:33","slug":"april-20-2010","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=10544","title":{"rendered":"April 20, 2010"},"content":{"rendered":"

Yet more commentary on Goldman, which has been selected for SEC charges<\/a>:<\/p>\n

The case against Goldman Sachs Group Inc. may turn on the meaning of the word \u201cselected.\u201d<\/p>\n

The Securities and Exchange Commission must prove that the most profitable company in Wall Street history defrauded investors by failing to disclose that a hedge-fund firm betting against them played a role in creating what they bought. It must also counter Goldman Sachs\u2019s assertion that an independent asset manager, which the SEC said rejected more than half of the securities initially proposed by Paulson & Co. for a collateralized debt obligation, signed off on the selections.<\/p>\n

\u201cThe question is whether Paulson\u2019s undisclosed role in portfolio selection was material,\u201d said Larry Ribstein, a law professor at the University of Illinois in Champaign who has written about 140 articles and 10 books on topics including securities law and professional ethics. \u201cThere\u2019s no clear and well-defined definition of what you have to disclose in this type of transaction.\u201d<\/p><\/blockquote>\n

“Selected” means whatever you want it to mean. Anybody who has been selected to receive a special mail-order offer knows that. In this particular case, I’d say that ACA’s role as portfolio manager was quite clear: ACA had full authority and full responsibility, full stop.<\/p>\n

Meanwhile, politicians in the native land of Magna Charta displayed a lynch-mob mentality<\/a>:<\/p>\n

Goldman Sachs should be suspended from working for the Government until the outcome of a fraud case brought against the investment bank by US regulators is known, opposition politicians said yesterday.<\/p>\n

The demand from the Tories and the Liberal Democrats came as the Financial Services Authority (FSA) began an investigation into the Wall Street giant’s operations in London. Goldman Sachs is on a rota of investment banks that advise the Treasury about debt issuance, which has risen dramatically as the budget deficit has escalated.
…<\/b>
After Gordon Brown described the US bank as “morally bankrupt” at the weekend, Vince Cable, the Liberal Democrat Treasury spokesman, said yesterday: “The Government should not be paying for the services of a bank that is being investigated on both sides of the Atlantic. The allegations made against Goldman Sachs are extremely serious. Not a penny of taxpayers’ money should be paid while these allegations hang over [the bank].”<\/p>\n

The Conservatives also questioned whether Goldman should still be on the roster of approved banks. Mark Hoban, the shadow Financial Secretary to the Treasury, said: “If Gordon Brown believes Goldman Sachs are ‘morally bankrupt’, why is he still using them as advisers? … He is lashing out at the people he was very happy to work with over the last 13 years as both Chancellor and Prime Minister.”<\/p><\/blockquote>\n

I’d remark on just who in this story has demonstrated moral bankruptcy, but those familiar with the elements of fundamental justice will know that already.<\/p>\n

The UK hasn’t yet cut off its nose to spite its face<\/a>:<\/p>\n

\u201cI don\u2019t think you can stop doing business with a firm because an individual is accused of doing something,\u201d [Chancellor of the Exchequer Alistair] Darling said in an interview as he traveled by train to Worcester, central England, today.<\/p>\n

Britain\u2019s Financial Services Authority said in a statement today it will formally investigate Goldman Sachs\u2019s London units after the U.S. Securities and Exchange Commission sued the bank for fraud last week over its marketing of a collateralized debt obligation. A Goldman Sachs vice president named in the SEC case, Fabrice Tourre, works at the bank\u2019s London office.<\/p><\/blockquote>\n

An element of Goldman’s defense<\/a> has leaked out:<\/p>\n

The company failed to disclose that hedge fund Paulson & Co. helped pick the underlying securities in a collateralized debt obligation and then bet against them, the SEC said in a lawsuit filed April 16. After being told in July 2009 that the SEC planned to bring a complaint, New York-based Goldman Sachs argued it had been compelled to keep Paulson\u2019s role secret.<\/p>\n

The SEC\u2019s \u201cproposed theory ignores the fact that, as a broker-dealer acting as an intermediary on behalf of a client, Goldman Sachs had a duty to keep information concerning its client\u2019s (Paulson\u2019s) trades, positions and trading strategy confidential,\u201d the company said in a Sept. 10, 2009, document addressed to the agency.<\/p><\/blockquote>\n

Goldman also points out that such client confidentiality is normal practice<\/a>. Deal Journal<\/i> has an expanded version of Friday’s press release<\/a>.<\/p>\n

Beyond politics, there’s another proposed rationale<\/a> for the SEC’s irrational lawsuit:<\/p>\n

SEC Chairman Mary Schapiro, 54, is expanding protection of so-called sophisticated investors such as pension funds, insurance companies and banks after financial companies worldwide lost more than $1.78 trillion since the start of 2007 in the worst economic crisis since World War II.<\/p>\n

\u201cThe days of \u2018buyer beware\u2019 may be changing,\u201d said Todd Henderson, a law professor at the University of Chicago. \u201cIn light of the financial crisis and the fact that sophisticated investors aren\u2019t just losing their own money but taxpayers\u2019 money, the interest of regulators is higher.\u201d<\/p><\/blockquote>\n

God save me from regulatory protection!<\/p>\n

Meanwhile, in Toronto the Precious, using the words “Apartheid” and “Israel” in the same sentence is considered not just objectionable, but a major issue<\/a>:<\/p>\n

But, she said, the city has told them that Toronto Pride had contravened its anti-discrimination policy on the grounds that “those words make certain participants feel uncomfortable.”<\/p><\/blockquote>\n

Golly, it’s just terrible that some things some people say make other people uncomfortable, isn’t it? This rivals the Barenaked Ladies<\/a> moronicity for sheer pointlessness. Perhaps I should write my local councillor – but which stamp should I use<\/a>? The march comes with credible estimates of $125-million into the city<\/a>, with additional spending by locals of about $89-million; despite the fact that (I’ll bet a nickel) I can find a lot more Torontonians offended by the whole idea of the march than might be made to “feel uncomfortable” at the sight of a few childish political slogans.<\/p>\n

Still, at least we’re not as precious as Vancouver<\/a>!<\/p>\n

Another day of startling relative returns in the Canadian Preferred Share market, with PerpetualDiscounts down 20bp and FixedResets losing 55bp to bring yields on the latter class up to 4.14%. One could argue that this type of flattening in the preferred share yield curve is a rational response to today’s BoC announcement<\/a>, but such an argument has too high a level of rationality to it to be appealing. Volume picked up again and was quite heavy.<\/p>\n

There are no winners on the performance highlights table, which is dominated by FixedResets; these issues also dominate the volume highlights (but that’s considerably more usual!).<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n
HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices<\/strong>
Values are provisional and are finalized monthly<\/td>\n<\/tr>\n
Index<\/td>\nMean
Current
Yield
(at bid)<\/td>\n		Median
YTW<\/td>\n		Median
Average
Trading
Value<\/td>\n		Median
Mod Dur
(YTW)<\/td>\n		Issues<\/td>\nDay’s Perf.<\/td>\nIndex Value<\/td>\n<\/tr>\n
Ratchet<\/td>\n2.57 %<\/td>\n2.65 %<\/td>\n53,160<\/td>\n20.92<\/td>\n1<\/td>\n0.4587 %<\/td>\n2,147.4<\/td>\n<\/tr>\n
FixedFloater<\/td>\n4.90 %<\/td>\n2.96 %<\/td>\n47,517<\/td>\n20.44<\/td>\n1<\/td>\n0.7256 %<\/td>\n3,268.8<\/td>\n<\/tr>\n
Floater<\/td>\n1.92 %<\/td>\n1.67 %<\/td>\n48,177<\/td>\n23.42<\/td>\n4<\/td>\n-0.4841 %<\/td>\n2,408.6<\/td>\n<\/tr>\n
OpRet<\/td>\n4.89 %<\/td>\n3.48 %<\/td>\n97,293<\/td>\n0.27<\/td>\n10<\/td>\n0.0585 %<\/td>\n2,307.5<\/td>\n<\/tr>\n
SplitShare<\/td>\n6.34 %<\/td>\n3.13 %<\/td>\n141,517<\/td>\n0.08<\/td>\n2<\/td>\n0.1095 %<\/td>\n2,151.7<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.0585 %<\/td>\n2,110.0<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n5.85 %<\/td>\n4.77 %<\/td>\n31,196<\/td>\n15.86<\/td>\n2<\/td>\n0.2845 %<\/td>\n1,842.6<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n6.18 %<\/td>\n6.21 %<\/td>\n201,968<\/td>\n13.62<\/td>\n76<\/td>\n-0.1985 %<\/td>\n1,727.0<\/td>\n<\/tr>\n
FixedReset<\/td>\n5.49 %<\/td>\n4.14 %<\/td>\n488,089<\/td>\n3.65<\/td>\n44<\/td>\n-0.5458 %<\/td>\n2,153.1<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Performance Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nChange<\/td>\nNotes<\/td>\n<\/tr>\n
BAM.PR.P<\/td>\nFixedReset<\/td>\n-2.27 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-10-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.27
\nBid-YTW : 5.86 %<\/td>\n<\/tr>\n
BNS.PR.Q<\/td>\nFixedReset<\/td>\n-1.79 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2018-11-24
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.29
\nBid-YTW : 4.58 %<\/td>\n<\/tr>\n
IAG.PR.A<\/td>\nPerpetual-Discount<\/td>\n-1.56 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2040-04-20
\nMaturity Price : 18.26
\nEvaluated at bid price : 18.26
\nBid-YTW : 6.37 %<\/td>\n<\/tr>\n
CM.PR.M<\/td>\nFixedReset<\/td>\n-1.21 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-08-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.88
\nBid-YTW : 4.57 %<\/td>\n<\/tr>\n
ELF.PR.F<\/td>\nPerpetual-Discount<\/td>\n-1.19 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2040-04-20
\nMaturity Price : 19.12
\nEvaluated at bid price : 19.12
\nBid-YTW : 6.99 %<\/td>\n<\/tr>\n
CM.PR.L<\/td>\nFixedReset<\/td>\n-1.18 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-05-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.89
\nBid-YTW : 4.50 %<\/td>\n<\/tr>\n
SLF.PR.F<\/td>\nFixedReset<\/td>\n-1.11 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-07-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.80
\nBid-YTW : 4.29 %<\/td>\n<\/tr>\n
TRI.PR.B<\/td>\nFloater<\/td>\n-1.06 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2040-04-20
\nMaturity Price : 22.98
\nEvaluated at bid price : 23.25
\nBid-YTW : 1.67 %<\/td>\n<\/tr>\n
BNS.PR.Y<\/td>\nFixedReset<\/td>\n-1.04 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2040-04-20
\nMaturity Price : 23.81
\nEvaluated at bid price : 23.85
\nBid-YTW : 4.04 %<\/td>\n<\/tr>\n
TD.PR.G<\/td>\nFixedReset<\/td>\n-1.03 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-05-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 27.02
\nBid-YTW : 4.13 %<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n
Volume Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nShares
Traded<\/td>\n		Notes<\/td>\n<\/tr>\n
TD.PR.G<\/td>\nFixedReset<\/td>\n123,747<\/td>\nRBC crossed two blocks of 50,000 each at 27.00.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-05-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 27.02
\nBid-YTW : 4.13 %<\/td>\n<\/tr>\n
BMO.PR.P<\/td>\nFixedReset<\/td>\n83,700<\/td>\nNesbitt crossed 25,000 at 26.15.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2015-03-27
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.10
\nBid-YTW : 4.60 %<\/td>\n<\/tr>\n
CM.PR.L<\/td>\nFixedReset<\/td>\n66,075<\/td>\nTD crossed 47,300 at 27.15.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-05-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.89
\nBid-YTW : 4.50 %<\/td>\n<\/tr>\n
GWO.PR.J<\/td>\nFixedReset<\/td>\n57,000<\/td>\nTD crossed 50,000 at 27.05.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-01-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.85
\nBid-YTW : 3.98 %<\/td>\n<\/tr>\n
TD.PR.I<\/td>\nFixedReset<\/td>\n51,700<\/td>\nDesjardins crossed 25,000 at 27.31.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-08-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 27.10
\nBid-YTW : 4.12 %<\/td>\n<\/tr>\n
TD.PR.M<\/td>\nOpRet<\/td>\n51,100<\/td>\nNational crossed 15,000 at 25.95; Nesbitt crossed 20,000 at 25.89.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2010-05-30
\nMaturity Price : 25.75
\nEvaluated at bid price : 25.75
\nBid-YTW : 3.45 %<\/td>\n<\/tr>\n
There were 64 other index-included issues trading in excess of 10,000 shares.<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

Yet more commentary on Goldman, which has been selected for SEC charges: The case against Goldman Sachs Group Inc. may turn on the meaning of the word \u201cselected.\u201d The Securities and Exchange Commission must prove …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[],"class_list":["post-10544","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/10544","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10544"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/10544\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10544"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10544"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10544"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}