Tuesday, 23 September 2014
Last updated 3 hours ago
Jan 26 2009 | 2:07am ET
Mortgage-backed securities hedge fund shop Ellington Management Group is crying foul over subprime mortgage loans it says it lost some $354 million on.
The Old Greenwich, Conn.-based firm has sued Ameriquest Mortgage Corp. and other divisions of its parent, ACC Capital Holdings, accusing them of lying about the risks inherent in the securities. According to a lawsuit filed earlier this month in New York federal court, the loans backing the securities bought by the hedge fund failed to meet Ameriquest’s own guidelines. Ellington alleges that the firm failed to verify borrowers’ employment, ignored late payments and misstated whether the borrowers actually lived on their properties.
Ellington characterized its investment in the bonds as “largely lost.”
Ameriquests’ “liability arises not from increasing default rates associated with a general economic downturn, but from their fraud—from lying to Ellington about the riskiness of the loans.”
The suit also names several former ACC entities bought by Citigroup in 2007. Citi itself is not named in the lawsuit, and a spokesman made clear to Bloomberg that it is not the successor to Ameriquest or Argent Mortgage, ACC’s former wholesale lending business.
Ameriquest, once one of the country’s largest subprime mortgage lenders, closed its doors in 2007. In January of that year, JPMorgan Securities—acting on Ameriquest’s behalf—reportedly approached Ellington about buying Ameriquest, although discussions apparently did not go far.
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitich, CIO of Petty Endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Aug 25 2014 | 11:21am ET
As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…
Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.