Auction Rate Securities are toxic at UBS

UBS AGImage via WikipediaIt is amazing that banks continue to use email given that they regularly are the means by which they hang themselves. In the latest episode, William Galvin, secretary of the Commonwealth of Massachusetts, subpoenaed documents from UBS which revealed that they were desperate to get rid of their holdings in auction rate securities from their balance sheet and dump them onto any unsuspecting victim / client. Meanwhile, the firm stuck to the public line that these remained highly liquid instruments.

When the $300bn ARS market seized up in Q108, many investors found themselves unable to liquidate at any price, albeit often receiving interest rates far in excess of the market rate.

The International Herald Tribune has the story here. It seems inevitable that UBS will be hit hard both financially and reputationally given the apparent mis-selling the emails suggest.

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posted by John Wilson @ 12:10 PM Permanent Link ,

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Hey Ofcom, here's a barrier to moving phone companies

Phone pole with phone and mainly electric linesImage via WikipediaI recently decided to switch phone companies and mentioned the hassle I had with the BT phone line order in a recent post. Boy, was that the easy part. Now I discover [my own fault for inadequate detailed investigation] that we shall be without broadband at home for probably 3 weeks as a consequence!!!!!!!

Why? Well, until 5 days after your BT phone line is installed you can't place an order with broadband providers. Thereafter they claim to need about 15 calendar days to connect you, despite not needing them to send you any equipment. Whilst BT themselves can achieve it slightly quickly, they are about twice the price of other suppliers to receive an equivalent service.

How on earth can it be the case that it takes 20 days to activate broadband? Moreover, why should it be the process can only begin when the phone line is activated.

To most reasonable people who have broadband, this surely counts as a barrier to switching companies - had I know, would I have switched? Definitely not. In which instance, is this not a matter that Ofcom should be considering when considering aiding a competitive market?
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Confusing worth with price

I received an email invitation today inviting me to sign up to a real-world networking group i.e. you actually meet people in real life rather than just online [old fashioned and quaint some may say].

I was struck by one of the "sales" points in the email.

We are giving away 1500 first year memberships worth £297 (+VAT) absolutely free.

Firstly, I chuckled about their use of the word "worth" since I think they were confusing it with price, which is often very different. Secondly, they were attempting to suggest you were getting a good deal as you otherwise would have to pay £297 - I'm intrigued as to who would pay such a fee, especially without understanding who you would be meeting at such events, and so question whether anyone would actually consider they were receiving a valuable inducement.

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Pirate Radio in the USA

The US blogosphere is in uproar about the notion that US radio stations should be paying artists for playing their music on air. Provision for royalties is to be considered by a U.S. House subcommittee could vote as early as tomorrow according to Wired.

You may think the notion that radio should pay for playing music is crazy, but the US is perhaps the exception in not doing so. It's been established practice in the UK for many years that radio pays for playing the music, regardless of the benefits the artist enjoys from having their product played to a large audience.

Clearly both sides benefit from the arrangement of music being played on radio [fills airtime with content that listeners want and musicians get their product publicised]- what is at issue is who should be paying who and in what proportion to the overall benefits received.

Oddities in the UK arrangements abound - if you want to advertise an album on radio then the artist pays the station but if radio features an album then they pay. If a concert is promoted by way of competitions with tickets as the prize, then a barter deal is often done such that the station get free tickets in exchange for promotion. Why should sanity get in the way here?

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posted by John Wilson @ 12:32 PM Permanent Link ,

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FSA Short Selling rules - a route to making money

FSA's headquarters, 25 The North Collonade, Canary Wharf, London, E14 5HSImage via WikipediaUnder new rules introduced by the Financial Services Authority last Friday, all short positions of more than 0.25% taken in a company during a rights issue have to be disclosed to the market by 3:30 p.m. the following day.

Widely believed to have been introduced by the FSA to assist banks during their fund raising exercises via rights issues, it has already failed to prevent the share price of HBOS failing below its right issue price. Indeed the new rules may have contributed to the fall. I make this assertion since one of the investors forced to disclose a material short position in HBOS was Harbinger Capital, who are well regarded. As a consequence, other investors may well have been prompted to follow their lead.

So, as to the title of this post. Assume you are are well-regarded fund or investor. You could benefit from a shorting a position in a company with a rights issue, having that advertised via the disclosure rules, waiting for other investors to follow your lead thus sending the price even further down and then closing your position at a profit - note the new rules only require disclosure once and so subsequent changes up/down need not be made. As a consequence, your investment "prophesy" is both fulfilled and performance achieved, thereby re-enforcing your pre-eminance as a wise investor.

Odder still is that whereas before talking down a bank stock might have gotten you in trouble with the FSA, now you can simply say nothing, short a stock which is a fairly clear signal of your views and use the FSA as your publicist.

Might this count as market abuse - better introduce another knee jerk rule change then!

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posted by John Wilson @ 12:31 PM Permanent Link ,

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Moo cards get real and square

To the outrage of many in the London Web 2.0 crowd, I've always thought Moo cards were awful. Of course, this has prompted many "discussions" when they've been offered to me on how I was so clearly "old school" in not getting the individual statement they made. Yet seeing someone's cringe-worthy photos on a "business card" occasionally made me retort that if they didn't take themselves seriously, why should they expect me too?

Backed by the Klein family [TAG] amongst others, I felt Moo catered to a niche market probably within a social networking environment who may like the quaint idea of handing out such cards. Moreover, I questioned whether this space would ever grow into a sufficiently sized market, with added doubts regarding the defensibility of its' offering against incumbent printers electing to compete.

According to the FT

Moo ships from the UK and is based in London. It has printed around 10m MiniCards in the past year and has shipped to 181 countries since it’s launch in September 2006. Around 55 per cent of its sales come from North America and French Italian, German and Spanish versions have just been launched.

So assuming 100 cards in a pack, and no repeat customers that would equate to 100k customers. Yet one suspects that they will have repeats and hence that unique customer number may be say 70k. Revenues of £1m+ approximately based on £9.99 for 100 cards, albeit their product mix has higher priced items.

Well, evidently the company itself has decided it is perhaps too niche and has announced it will now offer "boring" cards targeted at business customer as well, albeit they will be "square" in shape, presumably to reflect the mentality of their new target audience.

The odd thing about this move is that, whilst it moves them into a huge established market, it is a highly commoditised environment. Differentiation will be tough, especially in a) cost conscious times where many firms will be seeking to economise and not spend on lavish cards b) branding of the card manufacturer won't be represented on the cards - Moo cards were distinctive and were promoted each time they were distributed by their customers, but this won't apply in the business space. Similarly, will their existing brand image be affected by this move and cause any disenchantment with existing customers concerned about the loss of "hip" status? Or will they subscribe to the Huey Lewis and the News song title "Hip to be Square"?

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Does LinkedIn data belong to me or my employer?

JP evidently saw the same article I'd seen in the Daily Telegraph yesterday concerning how the recruitment agency Hays had gone to court to force an ex-employee to hand over details of his LinkedIn contacts. Apparently, the employee had been encouraged to use LinkedIn in his dealings with candidates / employers, but obviously when he left Hays these contacts remained on his LinkedIn profile and he had been able to get in touch with them on behalf of his new employer.

When I read this a number of issues sprang to mind in no particular order
Personally, I think Hays comes out of this looking petty and out of touch. Moreover, it suggests to me that their own internal systems may be weak if they need to also rely on the LinkedIn records of their recruiters - hardly inspires confidence that they will identify you as a suitable candidate for a role down the line.

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posted by John Wilson @ 8:59 AM Permanent Link ,

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BT.com online orders fall off a cliff

For a variety of reasons I made a decision to switch our home phone service back to BT from Bulldog, now owned by Pipex. Having looked on BT.com, the reconnection process appeared painless and so I placed my order online with BT and immediately received an order confirmation with a reference number.

Having heard nothing 5 days later, I was curious as to when the cutover might take place and so began an unexpected phone tour of BT call centres. Sadly, there was no trace of any order or even recognition of the order reference on the email, so each department passed me onto another team who may recognise the order/ref. Now, you may think this a one-off glitch but as it happens I placed a separate order for my parents phone and there was no trace of their order either.

I was astonished that a major sales channel for BT [online] with considerable prominence on their web site simply failed to operate and wonder whether Jillian G Lewis, Customer Services Director in whose name order acknowledgements are issued, is curious as to why online sales figures are so poor. You'd certainly imagine that basic testing of such processes takes place and regression testing is also undertaken. Evidently not.

As a consequence of this, I had to place a new order via phone, but it did leave me with a sinking feeling about what I am signing up to.

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Google mobile maps adds public transport directions

For anyone with a Blackberry or newish mobile phone, Google's mobile maps application is an absolute must-have application and best of all it's free.

I'm regular travel around London to attend meetings and having a easily accessible "A-Z" on the phone courtesy of Google maps is invaluable. I'm fortunate to have a Blackberry model that has GPS, which means I can also locate exactly where I am relative to my destination directly on the map. If the GPS signal is not good enough to get a location fix or if your phone doesn't have GPS, Google maps can identify your approximate location using mobile phone cell data. The service can even provides directions for you to follow to get to your destination - perfect for walking or driving.

Until now Google maps has lacked one feature - public transport guidance explaining how to get between point A and B of the sort provided by the Transport for London [TfL] website. As a consequence, I either have to use Tfl mobile site which isn't bad or head off to the nearest tube station. In release 2.2.0, Google have addressed this and now provide public transport information for Greater London directly within Google Maps. Very easy to install and use.

Go for it.

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posted by John Wilson @ 8:33 AM Permanent Link ,

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Google calendar synch isn't good enough

Google CalendarImage via WikipediaAs a consequence of wanting to use several new services that only integrate with Google Calendar, I recently decided to cut-over to it as a trial. Sadly, whilst I've no issue with the Calendar itself, I've been having a bad time with the official Google synch program that links it with Outlook 2003.

Historically I've used Airset to maintain a calendar online, which I synch with a desktop running Outlook 2003, which in turn synchronises with my Blackberry.

The biggest issue for me is that the synch application doesn't allow you to parameterise the dates that you wish to synch. Hence, each time I synch it tries to compare thousands of very old entries which dramatically slows the whole synch down to a crawl lasting several hours. I did try to get round this by archiving my desktop calendar items in Outlook 2003. Unfortunately, an unknown "event" caused all of the calendar entry modified dates to be reset to a recent date, as a consequence of which unless I archive every historic calendar entry then they won't clear down.

It's inflexibility like this that is both its' strength and weakness. Yet it is sufficiently infuriating that I'm close to abandoning my efforts and reverting to Airset which worked very well, especially with its synchronisation service.

Separately, I would love to find an Imap equivalent for calendar entries on different devices to enable entries to remain in synch, but don't know of such a mechanism. Any suggestions / answers?
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posted by John Wilson @ 2:55 PM Permanent Link ,

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Gmail spam filter is letting more stuff through

I've noticed far more spam getting through the Gmail spam filters over the last two weeks than I have ever experience. Normally very reliable, there could be many reasons why it's missing items. Inevitably I shall not be alone in this experience.

Oddly, you forget how invaluable the Gmail spam filter is until it's breached.
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Barcamp for financial services!

I'm delighted to see that a Barcamp focussed on banking and financial services has been arranged on Saturday 5th July with the kind sponsorship of Sun Microsystems in London.

More info and the wiki for the event can be found at http://barcamp.org/BarCampBankLondon

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