UBS Warburg's newly hired ABS pros Shahid Quraishi, Paul Scialabba, Reggie DeVilliers and Daniel Huang, poached from Banc of America Securities a few weeks ago (see ASR 4/15/02), were named in a lawsuit filed in Charlotte Superior Court last week. The suit alleged that the group downloaded proprietary information from the former firm prior to their resignation with the intention of using it in their new positions with UBS.
The suit also charges the group with misappropriation of trade secrets, conversion of confidential business information, unfair competition, breach of fiduciary duty, conspiracy to appropriate customers and breach of contract.
While this is a frequent occurrence after such poaching raids, the allegations of conspiracy to download and remove confidential information adds a new twist. As a result of the lawsuit, a restraining order was issued, barring the defendants from soliciting any business from any client the group serviced while at BofA.
In related news, Quaraishi poached former Salomon Smith Barney banker Jay Lown, to jump to UBS last week. Lown had been with Salomon for 10 years, and reportedly was the top subprime RMBS banker at the firm.
Bill Demchak, global head of structured finance and credit portfolio at J.P. Morgan, resigned last week. Demchak was responsible for oversight of the entire asset-backed securities, commercial mortgage-backed securities, credit derivatives, collateralized debt obligations, and loan portfolio departments. His destination is not yet known.
Rita Duggan, formerly a director in the securitization group of MBIA, has moved over to CDC IXIS Financial Guaranty, joining former MBIA colleague Jeremy Reifsnyder, who moved over to head the group's structure dfinance business the week prior. CIFG is the recently formed monoline arm of Caisse des Despots.
Fischer Francis Trees & Watts (FFTW) has lost Jeff Holtman, a senior structured finance portfolio manager, to KBC Bank. Holtman was one of the senior PMs looking after the firm's first arb cashflow structured finance CDO, Commodore, which priced in late February via Deutsche Banc, according to IFR Markets.
FFTW has assigned Causik Barua to look after the firm's $500 million subordinated ABS holdings that overlap with its CDO. Portfolio manager Scott Sheeler is looking after the FFTW's triple-A holdings along with portfolio analyst Frank Jacarino. The three report to David Marmon, the head of the structured products investment team.
FFTW holds $33 billion in fixed-income assets, $5 billion in structured finance, and $1 billion equivalent in foreign-currency structured finance assets. Seventy-five percent of the firm's SF holdings are triple-A positions.
"We see ABS as an undervalued asset class and subordinated ABS even more so, which is one of the reasons we firmly believe in our Commodore product," said Liaquat Ahamed, president and CIO of FFTW.
Last week Nomura Securities released a research report addressing current scrutiny of accounting practices, particularly for companies that use securitization as a means of financing and/or balance-sheet management.
Nomura brings several issues to the forefront, including the impact of ABCP conduits on bank leverage ratios and regulatory capital requirements, and the impact of securitization on an issuer's balance sheet. In doing so, Nomura challenges the economic integrity of securitization accounting via SFAS 140. "It strains common sense that a company's choice of financing method can so drastically change the appearance of its financial statements," researchers at the banks write.
A recent Bond Market Association (BMA) survey found that large lenders have placed on hold or canceled more than $7 billion in commercial mortgage loans - which represents 10% of the 2001 large loan volume -- due to the difficulty and expense of terrorism insurance coverage. The BMA said that these cancelled or delayed loans represent lost construction jobs and missed cost savings for property owners hoping to refinance at lower interest rates.
In a release, the BMA urges Congress to look into the potential fallout from the financing problems facing the commercial real estate industry. "It is critical Congress act to shore up the terrorism insurance market immediately," said the release. The BMA mentioned that the House and Senate each developed separate proposals to deal with the problem last October. These proposals would have made the federal government (through loan guarantees or direct payments) a reinsurer of last resort for insurance companies faced with significant terrorism-related claims. However, efforts to reach a compromise on the legislation ultimately failed.
April 22 23: Washington, DC - The Strategic Research Institute will host the Third Annual Student Loan Securitization Symposium. For more information visit www.srinstitute.com/ca271.
April 23: New York, NY - Fitch Ratings will host a conference on regarding a the many issues currently impacting Latin America. The conference will be held at The Ritz Carlton and will touch on sovereign ratings, the banking sector, asset securitization, and corporate finance. Arminio Fraga Neto, Governor of the Central Bank of Brazil has been confirmed as speaker for the conference. For more information, visit http://www.fitchratings.com/corporate/presentations/latin_america_conference/index.html or call Sheila Robinson 1-212-908-0632, New York.