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Morales Formally Charged by SEC
Posted on 11/14/12 at 7:36 pm
Posted on 11/14/12 at 7:36 pm
Rut rho, this can't be good...
SEC Charges Baton Rouge-Based Investment Adviser with Hiding Losses From Mortgage-Backed Securities Investments
Apparently Morales was cross trading within his funds to boost the reportable 'market' value. Reports say he instructed associates to execute trades that effectively smoothed loses between winning and losing funds. I know people who've worked there, all of extremely high character, and find that hard to believe. Also having worked in this industry, I know there can be grey areas in month-to-month valuations – expressly when it comes to recording CDOs. I guess this investigate has been going on for a while, but this is the first I've heard of it.
I hope this isn't true but like Buffett said - when the tide rolls out, you learn who's been swimming naked.
SEC Charges Baton Rouge-Based Investment Adviser with Hiding Losses From Mortgage-Backed Securities Investments
Apparently Morales was cross trading within his funds to boost the reportable 'market' value. Reports say he instructed associates to execute trades that effectively smoothed loses between winning and losing funds. I know people who've worked there, all of extremely high character, and find that hard to believe. Also having worked in this industry, I know there can be grey areas in month-to-month valuations – expressly when it comes to recording CDOs. I guess this investigate has been going on for a while, but this is the first I've heard of it.
I hope this isn't true but like Buffett said - when the tide rolls out, you learn who's been swimming naked.
4
Posted on 11/14/12 at 7:55 pm to TheSurge
I personally worked with Walter at Commonwealth for over three years and have a hard time believing this is as the SEC is saying.
It's possible he did something relatively complex for a legitimate reason that the SEC is assuming was with bad intent (they will do that at times) but it's very hard for me to believe he would intentionally defraud anyone.
And you are right, valuing CDO's is not an easy thing to do.
It's possible he did something relatively complex for a legitimate reason that the SEC is assuming was with bad intent (they will do that at times) but it's very hard for me to believe he would intentionally defraud anyone.
And you are right, valuing CDO's is not an easy thing to do.
This post was edited on 11/14/12 at 8:05 pm
Posted on 11/14/12 at 10:17 pm to foshizzle
Yea when I first read the report it sounded like some investigator reverse-engineering the MBS collapse looking for wrongdoings just to make a name for himself.
Posted on 11/14/12 at 10:23 pm to TheSurge
I was waiting for this to get posted it. I have a hard time believing it but we'll see how it shakes out.
Posted on 11/14/12 at 10:42 pm to Athanatos
Figured this would be posted as well.
It is hard to believe, knowing his character, but also understanding the point he was at in his career.
Hope it all works out for the best. He's been a great resource for a lot of LSU students.
It is hard to believe, knowing his character, but also understanding the point he was at in his career.
Hope it all works out for the best. He's been a great resource for a lot of LSU students.
Posted on 11/15/12 at 1:51 pm to TheHiddenFlask
NM
This post was edited on 11/15/12 at 1:53 pm
Posted on 11/15/12 at 2:13 pm to nhassl1
I truly can't believe this never turned into a flaming shite flinging fest. I would have put the odds on that around 98% when this was started.
Posted on 11/15/12 at 2:29 pm to TheHiddenFlask
Wasn't he a professor at LSU. I think I had a class with him and didn't much care for him. I liked the guy from N.O. that owned a pizza parlor and loved MSFT.
Posted on 11/15/12 at 2:33 pm to TheSurge
WOW, this dude sounds guilty as frick.
Posted on 11/15/12 at 2:36 pm to TheHiddenFlask
It's amazing the exposure some of the sleepiest funds and managed portfolios have (not that this is the case here). Read some of Frank Partnoy's stuff. The recent derivative bust is not unlike that seen in the 90s and will likely continue given they generate the highest fees and provide the vaguest accounting treatment.
This post was edited on 11/15/12 at 2:37 pm
Posted on 11/15/12 at 2:37 pm to Janky
quote:
Wasn't he a professor at LSU. I think I had a class with him and didn't much care for him. I liked the guy from N.O. that owned a pizza parlor and loved MSFT.
Yep. He taught investments & portfolio management I believe. He opened my eyes to finance. Tough class, but I think it was needed.
Posted on 11/15/12 at 2:42 pm to Broke
I had him for some kind of first level investments class. He actually showed up for less than 1/3 rd of the classes and had his TA teach the rest of the time.
Posted on 11/15/12 at 2:47 pm to LSUAfro
He's taught several classes at LSU, usually filling whatever gap they needed him to.
The guy is very clearly intelligent and I could listen to him speak every day.
With that said, his fund obviously comes first, sometimes at the detriment of his teaching. Ovearll, LSU has been lucky to have a guy like him as a supporter.
The guy is very clearly intelligent and I could listen to him speak every day.
With that said, his fund obviously comes first, sometimes at the detriment of his teaching. Ovearll, LSU has been lucky to have a guy like him as a supporter.
Posted on 11/15/12 at 2:52 pm to TheHiddenFlask
Had him for intro investments (ended up with a 105+ in the class...his grading scale was awesome) and the innagural 2 semesters of the student managed investment fund course.
Dude loved bullshitting about distressed securities (airline industry at the time) and the dumbasses in class thought that is what he would test on...dumbasses.
Dude loved bullshitting about distressed securities (airline industry at the time) and the dumbasses in class thought that is what he would test on...dumbasses.
Posted on 11/15/12 at 3:17 pm to TheSurge
quote:
including pension fund investors
Without knowing beans about that industry, am I right to expect copious amounts of 'fraud' cases over the next 20 years as pension funds either
a) realize they are underfunded for their commitments or
b) finally come clean that they have been underfunded on their commitments?
Remember, I said I know nothing of this industry and I could be totally off base with thinking pension funds are effed in the coming 20 years.
Posted on 11/15/12 at 4:22 pm to Meauxjeaux
quote:
Remember, I said I know nothing of this industry and I could be totally off base with thinking pension funds are effed in the coming 20 years.
No I think you are pretty much spot on. I think there is a time limit for them to get it funded if I remember right. They have to be funded at a minimum level no?
Posted on 11/15/12 at 4:28 pm to Meauxjeaux
quote:
Without knowing beans about that industry, am I right to expect copious amounts of 'fraud' cases over the next 20 years as pension funds either
a) realize they are underfunded for their commitments or
b) finally come clean that they have been underfunded on their commitments?
They know it and they report it already.
That might be a way for the states to try to ring some money out of people, but in reality, it won't net much money. The funds who committed real fraud go out of business, so you only end up suing the ones who didn't commit actual fraud, for the most part.
This is just a bunch of knee jerk stuff over the reporting fo very illiquid assets.
Posted on 11/15/12 at 4:56 pm to TheHiddenFlask
I think Morales is a smart guy and I had him for one class (I think it was that first semester when the Alumni Association gave Finance students like $2 million to invest).
In any event, I always thought there was something weird about him. I always thought he had trouble relating to the average student...probably because his intelligence level was very high.
In any event, I always thought there was something weird about him. I always thought he had trouble relating to the average student...probably because his intelligence level was very high.
Posted on 11/15/12 at 5:50 pm to TheHiddenFlask
quote:
This is just a bunch of knee jerk stuff over the reporting fo very illiquid assets.
This.
The SEC requires (or at least used to when I was in the biz) that you "mark to market" all the securities. Of course, mortgage backs are customized and therefore there is no liquid market, you have to refer to a pricing model. Which may be incorrect. Most of them were during that time, apparently.
Posted on 11/15/12 at 5:59 pm to TheSurge
I was disappointed when I saw the filing. For it to be disgruntled investors is one thing, the SEC another.
I really hope it's not true. As Flask mentioned, Walter has done a great deal for LSU Finance and many of our alumni owe him for either getting them interested in the field or with placement. He's made the relatively uphill climb that many of our brightest face to compete with target talent easier for a lot of people.
I really hope it's not true. As Flask mentioned, Walter has done a great deal for LSU Finance and many of our alumni owe him for either getting them interested in the field or with placement. He's made the relatively uphill climb that many of our brightest face to compete with target talent easier for a lot of people.
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