Accounting firm Grant Thornton threw in the towel last week in auditing subprime lenders Fremont General Corp. and Accredited Home Lenders. Both lenders disclosed that Grant Thornton resigned after advising them it would need to "significantly expand" the scope of its audit of their 2006 financial statements. The auditor reportedly said the two companies no longer met its "requirements for client acceptance." Some sources speculated the auditor was frazzled by certain aspects of the industrywide practice of valuing mortgage loans - an issue some have referred to as "Enron accounting." In the case of Fremont, Grant Thornton wrote in a Securities and Exchange Commission filing that the lender did not provide information needed to complete its review on dates previously agreed upon. Fremont denies this allegation. Grant Thornton also noted that, aside from the current industry environment, there were "significant events" that occurred within Fremont which required an expanded audit.
Deutsche Bank appointed Tim Nicolle as a managing director with responsibility for securitization in Central and Eastern Europe, Middle East and Africa. He will start his position in the second quarter of 2007.
He joins from German bank HVB, where he was most recently deputy head of the European securitization group, responsible for the Central Eastern Europe and CIS regions.
Dewey Ballantine hired Patrick de Carbuccia and Alexander Fraser as partners in its structured finance group. Both are from Reed Smith. Carbuccia and Fraser join two former Reed Smith colleagues, John Altorelli and Jeffrey Potash, who joined Dewey as structured finance partners a few weeks before. De Carbuccia and Fraser will focus on general corporate deals, specifically looking at private equity funds. Dewey is reportedly beefing up its structured finance business as more private equity firms using ABS to finance buyouts.
The Bank of New York has completed the conversion of the structured finance and CDO business divisions as part of the firm's purchase of JPMorgan Chase's corporate trust business. The conversion of these business segments, which combined process payments averaging over $20 billion per month, involved about 20,000 client accounts with 60,000 securities and cash positions. Since closing on the sale in October 2006, the bank has been systematically transitioning accounts, assets, systems and staff across its global corporate trust business. Aside from structured finance and CDOs, it has also converted the corporate, municipal and global Americas business divisions. The conversion - which involves the international and loan agency business segments - should be completed by the end of 2Q07.
Jefferies & Co. has hired four senior sales and trading professionals for its fixed income division, boosting the firm's MBS sales and trading business. Paul Shapiro was hired as managing director while Anthony Slabaugh joins as a senior vice president to drive the firm's MBS trading efforts. Christopher Drabin, who will be based in New York, joins as a senior vice president and trader focused on ARMs while Edward Johns joins as a senior vice president in the firm's Boston office to focus on MBS sales. Shapiro, Johns and Slabaugh were all from KeyBanc Capital Markets. As part of his 12-year stint at KeyBanc's Cleveland location, Shapiro was a director of fixed income in charge of MBS trading. Johns was a managing director in the fixed income division at KeyBanc, where he focused on MBS sales and worked for over seven years. Slabaugh spent the last six years in KeyBanc, most recently as a senior trader focused on CMOs. Meanwhile, Drabin was formerly a senior vice president at Cantor Fitzgerald, where he traded all agency and whole-loan ARM products for over three years.
Allegheny Power priced its $460 million environmental control bond transaction last week. Barclays Capital, First Albany, Loop Capital, Bear Stearns and Scotia Capital will serve as underwriters for the energy company, while Saber Partners will serve as the financial adviser for the West Virginia Public Service Commission, according to press reports and people familiar with the deal. The company will use the proceeds to finance the costs of building an emissions control facility at a West Virginia plant.
Lewtan Technologies introduced it latest version of ABSNet European Cash Flows. ABSNet European Cash Flows provides routinely updated analytics that are integrated with ABSNet's deal performance database, which tracks more than 17,000 European asset-backed securities. The new ABSNet European Cash Flows features a revamped interface that allows users to directly navigate between cash flows, pricing analytics, waterfall views, and cash-flow graphs. The system also enables users to model delinquencies, forecast excess spread rates, and solve for first loss - all critical aspects of assessing the robustness of a transaction against liquidity and default stresses. The ABSNet European Cash Flows library contains securities backed by RMBS, ABS, and CLO transactions from across all regions of Western and Central Europe. In addition, ABSNet European Cash Flows actively models pre-issuance transactions as they come to market.
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