With the era of record-low defaults winding down, distressed bonds are growing at their fastest rate since 2003. A Merrill Lynch & Co. index puts distressed bonds at $24.8 billion, a fivefold increase since June.
A three-judge panel of a federal appeals court has ruled that Financial Securities Assurance has no standing to bring securities-fraud charges against Stephens for alleged misrepresentations in connection with $69.6 million in defaulted bonds. Leslie Norwood, SIFMA managing director and associate general counsel, applauded the decision, noting it "highlights the importance of reasonable due diligence."
The Securities and Exchange Commission is taking a closer look at hedge funds and insider trading. Since May, the SEC has asked about two dozen hedge funds for information that would help the regulatory agency identify hedge fund employees who are in a position to conduct insider deals.
Minutes from last month's Federal Reserve meeting show that central bankers were concerned the slowing housing sector could affect projections for moderate economic growth. The minutes said that directors viewed the economy as "relatively healthy" and that it had been bolstered by continued global growth. The minutes did not cover discussion of an interest-rate cut announced after the meeting.
Some analysts have upgraded their ratings of Thornburg Mortgage after the REIT took action recently to shore up its financial position. Thornburg has generated more than $20 billion in capital since Aug. 20, a move one analyst says "made the company a buyer of discounted jumbo mortgage loans vs. a seller of distressed assets."
In an attempt to alleviate concerns of brokers at A.G. Edwards & Sons, six Wachovia Securities executives took a tour to visit the brokers and discuss the merger of the two companies. "For two hours, we pummeled [Wachovia CEO Danny Ludeman] with questions," said an A.G. Edwards branch manager, who requested anonymity. "We felt he didn't give a politician's type of answers. He told us what he knew."