...Goldman Sach vs. SEC By: Lemar Clayton The Goldman Sachs situation presents a leadership ethics dilemma. Is it okay for banks to bet against their customers to manage risk and hedge their bets? In fact, I’m willing to bet that opposing sides in the argument don’t even see this as a dilemma. “The senate subcommittee grilled Goldman executives for 11 hours because they clearly think that what Goldman did was morally wrong, if not illegal.” ("Sec charges goldman," 2010) Contrast that with Goldman’s shareholders, who probably think it’s unethical for Goldman’s executives not to hedge against a mortgage collapse. There is a middle position that says the hedging itself wasn’t wrong, it was how Goldman did it that was questionable. Goldman should have disclosed its short position and possibly even details about the origins of those CDOs to customers. Let me begin by explaining what is a CDO, Goldman takes a reference portfolio, or a bunch of bonds. A bond is a formal contract to repay borrowed money with interest at fixed intervals. Each set of bonds is senior to all the bonds below it, and they pay principle in order of their seniority. You can view it as a pyramid with different slices. The portfolio is giving a rating by Wall Street. Each slice has a different maturity and risk associated with it. The higher the risk, the more the CDO pays. Level E will take losses before D, and level C will take losses before B. It’s important to note the bonds don’t have...
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...for self, or engage in any other self-dealing while they are doing their jobs on behalf of their clients. Given the many scandals of recent years, many companies have done their best to publicize their codes of ethics, and to acknowledge their responsibility to the public. These firms know that public confidence in their finance people matters a great deal, and unethical behavior on the part of a firm means that people will stay away from that firm, and they may stay away from all the others as well. That is why ethics are not merely relevant. On the contrary, they're vital to the existence of the industry. Good ethical behavior is not an optional. While researching the ethical behavior of the top investment banks worldwide, (Goldman Sachs & Co, J.P. Morgan Chase, Morgan Stanley, Credit Suisse, Bank of America / Merrill Lynch, Deutsche Bank) there seem to be a constant theme. All of the top investment banks have some type of ethical violation that has resulted in some monetary amount been paid by the bank. Does this mean the investment banking industry culture as a whole practice...
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...Melisa Schellhamer, April 13, 2010 Melisa Schellhamer, April 13, 2010 SEC files a fraud case against Goldman Sachs, an industry leader, is now being investigated for unfair investing scandal. SEC files a fraud case against Goldman Sachs, an industry leader, is now being investigated for unfair investing scandal. Goldman Sach’s Case # 5 AC805 Advanced Management Accounting Control Systems Goldman Sach’s Case # 5 AC805 Advanced Management Accounting Control Systems The Goldman Sachs fraud case opened by the Securities and Exchange is one of the items that were highlighted by the down turn of the economy in the last few years. Goldman Sachs has vigorously denied any wrongdoing, but the case against them seems fairly tight if the information currently provided is accurate. At the center of all of this Fabrice Tourre. Tourre is an employee of Goldman Sachs that has been charged with fraud. The nature of the charge is that as an employee of Goldman Sachs he helped create a Collateralized Debt Obligation (CDO) that was not disclosed to potential investors. More damning than anything however that seized email correspondence is seems to point to the fact that he was fully aware of what he was doing. How this all ties in is that a CDO is an investment vehicle whose performance is directly related to a set of assets. In regards to this case the CDO was a family of securities that were backed by subprime residential mortgages. As this is considered risky...
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...Question 1 What was the motivation to issue Nikkei-linked Eurobonds? The motivation for the European bank issuers of the Eurobonds, wasthe possibility to get U.S. dollar finance for a lower interest rate. Toachieve this, the issuer could sell the embedded put to Goldman Sachs. The profits from the put offset the difference between the 7%coupon they paid on the bonds and the desired LIBOR floating rate. The payment from the put covered the cost paid to the swapcounterparty for hedging the exposure to the Yen-Dollar exchangerate and swapping the LIBOR for a higher coupon rate. The European financial institution was left with a fully hedged U.S. dollar financing with a lower than normal coupon rate.Furthermore, due to some specific administrative regulation in Japan, the demand for these kind of coupons was high. In Japan,companies where not allowed to pay dividend out of capital gains. Moreover, dividend payments where an important factor in gaining an competitive advantage. Therefore, this bond construction allowed the Japanese life insurers (investors) to use the coupon rateto pay out dividend while still maintaining an exposure to the Nikkei. How are the puts embedded in the Nikkei-linked Eurobonds? A normal bond to Japanese institutions would pay a coupon rate lessthan 7%. The amount by which the 7% exceeded the normal couponrate can be seen as the put premium paid by the issuer. If, atmaturity, the Nikkei dropped below a pre-determined value (hencethe theoretical strike...
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...(plus delivery) (plus delivery) The Great American Bubble Machine Fřǿm țěčħ șțǿčķș țǿ ħįģħ ģǻș přįčěș, Ģǿŀđmǻň Șǻčħș ħǻș ěňģįňěěřěđ ěvěřỳ mǻjǿř mǻřķěț mǻňįpųŀǻțįǿň șįňčě țħě Ģřěǻț Đěpřěșșįǿň -- ǻňđ țħěỳ'řě ǻbǿųț țǿ đǿ įț ǻģǻįň BỲ MǺȚȚ ȚǺİBBİ | Ǻpřįŀ 5, 2010 Șħǻřě Țẅěěț Șħǻřě Čǿmměňț Ěmǻįŀ ADVERTISEMENT Victor Juhasz The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great http://www.rollingstone.com/politics/news/thegreatamericanbubblemachine20100405 AROUND THE WEB 1/61 1/15/2015 The Great American Bubble Machine | Rolling Stone vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman Sachs graduates. '80ș Șțǻřș Ỳǿų Ẅǿň'ț Řěčǿģňįżě Țǿđǻỳ 5 Mįňǿř 'Șțǻř Ẅǻřș' Ǻčțǿřș Ỳǿų Đįđň'ț Řěǻŀįżě Ẅěřě İň Ěvěřỳțħįňģ Mųșįčįǻňș Ẅħǿ Ǻřěň’ț Ẅħǿ Ỳǿų Țħįňķ Țħěỳ Ǻřě Fǻmǿųș Șǿňģș Țħǻț Ẅěřě Ẅřįțțěň Ǻbǿųț Čěŀěbřįțįěș ȘİĐĚBǺŘ Invasion of the Home Snatchers By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously selfserving plan to funnel trillions...
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...Stockholm School of Economics 4307 Banking and Financial Intermediation Term Paper 16th October 2015 Authors: Aatman Ajmera- 40743, Abhilash Badami-40744, Lampros Baltas-40757 New Business Models: Peer-to-Peer (P2P) Lending Abstract: This paper evaluates the efficacy of the peer-to-peer lending model. While we primarily discuss the consumer loan market, the structure, principles and associated risks are fairly similar for other end markets as well. Contrary to popular opinion, empirical evidence from the limited available market data proves that P2P platforms do not have a lower cost as a percentage of loan receivables at this point compared to traditional banks. As these higher costs are primarily due to marketing activities, going forward, with scalability, they are poised to generate significant cost savings. Through our research, we conclude that P2P lending has a strong value proposition and the potential to disrupt the existing lending market, however, data quality, regulation and investor confidence will play a monumental role in determining the speed and magnitude of its success. What is peer-to-peer lending? Technological evolution, along with changing consumer behaviour, has led to a new era of innovation in financial services and subsequently more transparent and easy-to-use platforms. One of the new business models that has evolved, is peer-to-peer (P2P) lending. In essence, P2P lending is a form of debt financing which allows borrowers and...
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...(FORTUNE) -- In Hollywood parlance, the "It Girl" is someone who commands the spotlight at any given moment -- you know, like Jennifer Lopez or Kate Hudson. Wall Street is a far less glitzy place, but there's still such a thing as an "It Stock." Right now, that title belongs to Enron, the Houston energy giant. While tech stocks were bombing at the box office last year, fans couldn't get enough of Enron, whose shares returned 89%. By almost every measure, the company turned in a virtuoso performance: Earnings increased 25%, and revenues more than doubled, to over $100 billion. Not surprisingly, the critics are gushing. "Enron has built unique and, in our view, extraordinary franchises in several business units in very large markets," says Goldman Sachs analyst David Fleischer. Along with "It" status come high multiples and high expectations. Enron now trades at roughly 55 times trailing earnings. That's more than 2 1/2 times the multiple of a competitor like Duke Energy, more than twice that of the S&P 500, and about on a par with new-economy sex symbol Cisco Systems. Enron has an even higher opinion of itself. At a late-January meeting with analysts in Houston, the company declared that it should be valued at $126 a share, more than 50% above current levels. "Enron has no shame in telling you what it's worth," says one portfolio manager, who describes such gatherings as "revival meetings." Indeed, First Call says that 13 of Enron's 18 analysts rate the stock a buy. But for all...
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...Case Study Outlines Part One: A New Era Founding Performance P f Trading strategy Mutual Fund & Hedge Fund u ua u d edge u d Part Two: When Genius Failed Downturn: 1998 Russian Financial Crisis Chain Reaction In the end: Bailout & Characters Part Three: Enemies are ourselves Risk Measurement Diligence, Ethics and Honesty Dili Ethi dH t Part One: A NEW ERA Founding of LTCM LTCM was founded in 1994 by John Meriwether, the former vice‐ chairman and head of bond trading at Salomon Brothers t di tS l B th LTCM was a speculative hedge fund based in Greenwich, Connecticut that utilized absolute‐ h l d b l return trading strategies combined with high leverage. The fund's operation was designed to have extremely low overhead; trades were conducted through a partnership with Bear Stearns and hi i h B S d client relations were handled by Merrill Lynch. LTCM Partners John Meriwether Former vice chair and head of bond trading at Solomon Brothers; MBA, University of Chicago Leading scholar in finance; Prof. at Harvard Co-author of Black-Scholes model; Prof. at Stanford St f d Vice chairman of the Fed; Prof. at Harvard; Arbitrage g p at Salomon; former Harvard g group ; Prof. Arbitrage group at Salomon; former Harvard Prof. Arbitrage group at Salomon; Ph D MIT Ph.D. Arbitrage group at Salomon; Ph.D. MIT Bond trader B dt d Executive at Salomon Arbitrage group at Salomon; Master in Finance, LSE Robert C. Merton Myron Scholes David W. Mullins Eric Rosenfeld...
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...Global Business Research & Analysis 402 (SEC 103) Project # 1 June 8, 2012 Cover letter 7 Susan Street, Scarborough, Ontario, M1G1N6 Phone: 647-534-7155 cells: 647-534-7155 sugandeep88@yahoo.com June 8, 2012 Dr. Julie Nguyen Centennial College 941, Progress Avenue Toronto, Ontario M5B1M4 Dear Professor: I am happy to show you my research project on the topic “ Prospects of Canadian Trade and Investment with the Next Eleven”. In the research I have shown that the economic growth of the N-11 countries is likely to increase on a large scale in the years to come. Most of the major countries of the world are focusing on investing in BRIC (Brazil, Russia, India, China) but they are least concerned in investing with the N-11. In my research i have shown that investing in N-11 can prove out to be very profitable. I have particularly focused the trade and investment relationship between Canada and one of the Next Eleven countries that is Vietnam. In my research you can see the raw and products that Canada is exporting to Vietnam. The GDP of Vietnam is increasing rapidly year by year. Canada export business with Vietnam is rising up as the time is passing by. Canada is exporting the products that Vietnam needs. I have attached my research project paper along with this cover letter. I hope that my project will provide some value and knowledge about the subject though it being my first research project. Thanking You Yours sincerely Canada...
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...VAULT CAREER GUIDE TO INVESTM E NT BAN KING 2008 EDITION is made possible through the generous support of the following sponsors: Customized for: Triston Francis (tfran@wharton.upenn.edu) SEO Online Career Library The media’s watching Vault! Here’s a sampling of our coverage. “For those hoping to climb the ladder of success, [Vault’s] insights are priceless.” – Money magazine “The best place on the web to prepare for a job search.” – Fortune “[Vault guides] make for excellent starting points for job hunters and should be purchased by academic libraries for their career sections [and] university career centers.” – Library Journal “The granddaddy of worker sites.” – U.S. News & World Report “A killer app.” – New York Times Customized for: Triston Francis (tfran@wharton.upenn.edu) SEO Online Career Library One of Forbes’ 33 “Favorite Sites” – Forbes “To get the unvarnished scoop, check out Vault.” – SmartMoney Magazine “Vault has a wealth of information about major employers and jobsearching strategies as well as comments from workers about their experiences at specific companies.” – The Washington Post “A key reference for those who want to know what it takes to get hired by a law firm and what to expect once they get there.” – New York Law Journal “Vault [provides] the skinny on working conditions at all kinds of companies from current and former employees.” – USA Today Customized for: Triston Francis (tfran@wharton.upenn.edu) SEO Online Career Library ...
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...Oxford University Press All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Oxford University Press. Library of Congress Cataloging-in-Publication Data is available ISBN-13: 978-0-19-530792-4 ISBN-10: 0-19-530792-5 1 3 5 7 9 8 6 4 2 Printed in the United States of America on acid-free paper For Chaille Bianca and Vivienne Lael and William Grant who says he wants to be an investment banker ACKNOWLEDGEMENTS As a f i r s t - t i m e au t h o r , I have many people to thank. Luckily for the reader, most of them are current and former employees of Goldman Sachs and Morgan Stanley who would prefer not to be cited. Their support and insight were invaluable to this enterprise. For early encouragement and guidance I must also thank Clare Reihill at Harper Collins, Brian Kempner and Peter Kaplan at the New York Observer, L. Gordon Crovitz...
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...Research in Higher Education Journal Centering the business capstone course on the banking crisis: concrete integrated pedagogy Khalid A. Razaki Dominican University Wayne Koprowski Dominican University Peter Alonzi Dominican University Robert Irons Dominican University Abstract The recent financial crisis offers instructors rich material for business programs regarding the relations between accounting, business law, economics, and finance, as well as ethical issues. This paper offers a concrete approach to developing a business capstone course built around the financial crisis and the lessons it offers business students. Complete pedagogical modules are offered for each discipline, including suggestions for specific assignments in each discipline. Key Words: Capstone Course, Banking Crisis, Pedagogy Centering the Business Capstone Course, Pate 1 Research in Higher Education Journal INTRODUCTION A capstone course is essential in the business school curriculum. It provides each student the time to refresh their grasp of and to hone their ability to apply the principles, tools, and methods of the fields comprising the business curriculum. Further, it gives students the opportunity to integrate the insights of the various fields. The effectiveness of the capstone course can be enhanced by centering the capstone course on the 2008 financial crisis. All students share the common experience of the 2008 crisis’s violent shaking of the economy. It immediately affected each...
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...CAPITALIZATION Master of Business Administration Master Business Administration for Executive (Chiang Mai) Faculty of Business Administration Chiang Mai University March, 2012 Facebook’s Capitalization Report by Thanassorn Boontarika Pinnarat Sathit Saowaluk Hathairat Ratanasirisap Pongpaew Suriyachot Chobpimai Sangkuan Yosdech Code Code Code Code Code Code 541532126 541532137 541532142 541532155 541532164 541532176 Report to Dr. Chaiwuth Tangsomchai Course work 702711 Financial Management) Master of Business Administration for Executive(Chiang Mai) Business Administration Chiang Mai University March, 2012 - - Index - Page Chapter I Introduction & Objective 1.1 Introduction 1.2 Objectives Chapter II Company 2.1 Facebook, Inc. Profile 2.2 The Corporate Mission 2.3 Executive Officer and director 2.4 Facebook’s Shareholder 2.5 Facebook Milestone 2.6 Facebook Business 2.7 Competition 2.8 Revenues Stream 2.9 Facebook Market Opportunities 2.10 Facebook Strategy 2.11 Summary of Risk Factor Chapter III Facebook Financial Report 3.1 Consolidated Balance Sheets 3.2 Consolidated Statement of Income 3.3 Basic Earning Per Share 3.4 Pro-forma Earning Per Share 3.5 Consolidated Statement of Cash Flow 3.6 Consolidated Statement of Stockholder’s Equity 3.7 Dividend Policy Chapter IV Facebook Initial Public Offerings(IPOs) 4.1 IPOs Advantage 4.2 Preparing to go to Public 4.3 Facebook IPOs 4.4 Facebook IPOs Underwriting Company 4.5 Facebook IPOs Counsel Company 4.6 Facebook...
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...Why Has IPO Underpricing Increased Over Time? Tim Loughran University of Notre Dame P.O. Box 399 Notre Dame IN 46556-0399 219.631.8432 voice Loughran.9@nd.edu and Jay R. Ritter University of Florida P.O. Box 117168 Gainesville FL 32611-7168 352.846.2837 voice ritter@dale.cba.ufl.edu http://bear.cba.ufl.edu/ritter March 18, 2002 We wish to thank Hsuan-Chi Chen, Craig Dunbar, Todd Houge, Josh Lerner, Alexander Ljungqvist, Donghang Zhang, two anonymous referees, and seminar participants at Boston College, Southern Methodist University, Texas Christian University, and the Universities of Colorado, Houston, Illinois, Indiana, Iowa, Notre Dame, and Pennsylvania for useful comments. Chris Barry, Laura Field, Paul Gompers, Josh Lerner, Scott Smart, Li-Anne Woo, and Chad Zutter generously provided IPO data. Bruce Foerster assisted us in ranking underwriters. Underwriter ranks are available online at http://bear.cba.ufl.edu/ritter/rank.htm. Donghang Zhang supplied useful research assistance. Why Has IPO Underpricing Increased Over Time? Abstract In the 1980s, the average first-day return on initial public offerings (IPOs) was 7%. The average first-day return doubled to almost 15% during 1990-1998, before jumping to 65% during the internet bubble years of 1999-2000. Part of the increase can be attributed to changes in the composition of the companies going public. We attribute much of the increase in underpricing, however, to previously latent agency...
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...Investment Banking in USA and Bangladesh Scope for Innovation Md. Shakhawat Hossain1 Abstract I discuss briefly the purposes and activities of Investment banking in USA and Bangladesh. The overall performance and structures of investment banks in USA and Bangladesh are shown in this report. Financial system of a country is always getting advanced and complex. Banking system in today’s world has evolved over long period of time. There have been lots of ups and downs or we can call financial crisis in this time period. One of the heavily regulated sectors in world economy is banking sector. This report focuses on how a bank performs in advanced economy and moderately advanced economic situation. There is a significant scope for Bangladeshi investment bank to compete in global market. Several studies have shown that investment banks play a major role along with government and in public finance. 1. East West University, Department of Business Administration. This project preparation is for academic and final year submission to project supervisor Quazi Sagota Samina. 1 The Evolution of Banking Banks are just one part of the world of financial institutions, standing alongside investment banks, insurance companies, finance companies, investment managers and other companies that profit from the creation and flow of money. As financial intermediaries, banks stand between depositors who supply capital and borrowers who demand capital. Given how much commerce...
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