Dealbreaker:
So let’s take a look at this lawsuit filed yesterday by a UBS commercial mortgage strategist named Trevor Murray. He seems not to have gotten along with his boss Ken Cohen, a former Lehman guy now in charge of UBS’s CMBS business. From the complaint:
13.
Plaintiff was … the target of a concerted, extended effort by UBS
Securities, through Mr. Cohen, as well as others reporting to Mr. Cohen,
to influence Plaintiff to skew his published research in ways designed
to support UBS Securities’ ongoing CMBS trading and loan origination
activities.
14. In June 2011 Mr. Cohen implored Plaintiff, in
words or effect, to help “improve conditions in the CMBS market” because
this was to be a “significant revenue generator” for the investment
bank at UBS Securities. In or around September 2011, Mr. Cohen, along
with the head CMBS trader, sat directly next to Plaintiff and told him
that a person from the market had approached Mr. Cohen about Plaintiff’s
research. Mr. Cohen stated that he disagreed with Plaintiff’s research,
and asked Plaintiff, so as not to “confuse” the market, to inform the
head CMBS trader about his research ideas prior to publication in order
to maintain “consistency” between what he and they were saying about UBS
Securities’ CMBS products and trading positions.
They go on to point out that it sounds like he was actually a strategist, not a researcher, so the research rules they're trying to trip UBS up on are not going to apply. If your a strategist, you work for the desk and are biased, if you're a research analyst you're supposed to be unbiased. It also sounds like he was off message with his employer, the desk. DB then points out that it turns out his position was kind of wrong too, so, that kind of sucks for him. So, you have a guy whose boss thinks he's doing a bad job, data backs that up at least to some extent, he gets fired, and then he sues and makes allegations which probably open him up to damage claims from UBS. I have a feeling this isn't going to work out well for him and he's going to end up spending $20-$50k to figure that out.
To be clear, that's just my 5 minute take away on the matter - he may have a more compelling case, but it's not apparent from the DB article or the Bloomberg and Reuters stories that are out about it either...
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6 comments:
I'll go ahead and be the first to comment - you shouldn't trust what you read in the paper, on dealbreaker, or blogs. Especially about lawsuits. It's nearly always wrong, over-sensationalized, and journalists/bloggers/authors never come back and say, "oh, actually it turned out that our original article was completely wrong and he ended up winning the case". Trust me on this one ;).
Taking the complaint at face value, I'd be a bit surprised that someone in the position of Murray's boss would ever be so specific as to what was motivating the desire for Murray to be more 'on message'. Not saying that these type of games don't happen, but I would expect more discretion on the choice of language, as there would have been numerous other reasons to cite when instructing Murray to get in line with the house view. The 'bitter former employee sues and wants money' theory makes much more sense from my perspective.
Mr. Murray said the market should tank. And I agree with him, as it becomes apparent that first liens can get modified into junior liens, and AJs become interest-only. It was pretty courageous to come out with this view, when your desk is by definition long. However, his position does not ask for intellectual honesty, and for that he will suffer unless the judge figures it out.
Crabsofsteel - was curious if there is any specific cause of the disconnect between where the market is and where it should be (or will soon be, perhaps). Is this simply a hunt for yield issue or is there something else going on? I agree with your and Murray's assessment that the market should be in the tank, and while I am not familiar with the specifics you cited (not the world i work in) I've become really concerned about weakening leasing activity and see the potential for big trouble ahead..
The answer is that no one knows what is going on. Savoy Park was talked at liquidating at full face value; 28 B-note. Skyline Portfolio; originally talked at 30% writeoff; no default. In an uncertain environment, who knows what's what.
just following up: both Savoy Park and Skyline got 30% B-notes ... the worst of both worlds. Investors remain blissfully ignorant
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