Tuesday, January 11, 2011


APS Financial Corporation (“APS”) recently entered in to a Letter of Acceptance, Waiver and Consent (“AWC”) with the Financial Industry Regulatory Authority (“FINRA”). As a procedural matter, the AWC was submitted to FINRA's Department of Market Regulation for acceptance or rejection.

It should be noted from the outset that APS consented to the terms of the AWC without admitting or denying the findings contained within it, to wit: violations of NASD Rules 2110, 2440 and 3010 due to allegedly unfair pricing practices directed at certain customers purchasing corporate bonds, collateralized debt obligation.

A recent review of the Securities Litigation Commentator and a daily review of the Wall Street Journal amply illustrates the ongoing regulatory and private litigation fall-out born of the 2006 – 2008 CDO and CMO boom. Indeed, even Charles Schwab got hit by the SEC for $119 million for allegedly making misleading statements regarding the risks associated with a bond mutual fund containing mortgage-backed securities. For a more in depth and interesting narrative of the practices and characters associated with the securitization of residential mortgage debt, this author highly recommends Michael Lewis' The Big Short.

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