{"id":6391,"date":"2018-08-14T16:15:35","date_gmt":"2018-08-14T16:15:35","guid":{"rendered":"http:\/\/www.investorlawyers.com\/?p=6391"},"modified":"2018-08-14T16:15:35","modified_gmt":"2018-08-14T16:15:35","slug":"defective-swaps","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/defective-swaps\/","title":{"rendered":"Defective Security Swaps"},"content":{"rendered":"<p>\t\t\t\tThe attorneys at the law firm Shepherd, Smith, Edwards &amp; Kantas LLP are currently investigating claims of institutional investors involving swaps or other ongoing, inappropriate investments.\u00a0 Many companies, state municipalities, and other governments were talked into entering into swap transactions, either as a part of another securities transaction such as a new bond issuance, or on their own.\u00a0 Typically, these swaps were sold as ways to hedge fluctuating liabilities that the customer already had, or in some other way to reduce financing expenses.<\/p>\n<p>In a typical swap, the two parties are effectively exchanging a fixed rate and a variable rate.\u00a0 The party that currently has a variable rate liability, oftentimes a bond, enters into the transaction to avoid the carrying costs associated with that bond\u2019s benchmark rising.\u00a0 In exchange, that party agrees to pay the other party a fixed, periodic payment.\u00a0 If the swap is done correctly, it allows the party with the original variable rate to avoid the consequences of its bond, or other liability, rate increasing because, if the rate were to increase, that rate increase would actually end up being paid by the swap counterparty.\u00a0 Conversely, if the rate on the bond decreased, the costs of that obligation would go down correspondingly to the increased cost of the swap, creating a wash.\u00a0 The party has effectively transformed a variable obligation to a fixed one.<\/p>\n<p>Unfortunately for many of those customers, many of these swaps have proven wholly ineffective in fulfilling their expressly stated purposes.\u00a0 The reasons for these failures can vary significantly.\u00a0 In some cases, the swaps are set up incorrectly, such as not taking into account various reasons that the underlying obligation could fluctuate, or not marking the swap to the same benchmark as the underlying obligation.\u00a0 Whatever the reasons for their failure, many institutions have found themselves with hugely expensive carrying costs for these swaps and equally huge termination penalties to try to get out of them.<\/p>\n<div class=\"read_more_link\"><a href=\"https:\/\/www.investorlawyers.com\/blog\/defective-swaps\/\"  title=\"Continue Reading Defective Security Swaps\" class=\"more-link\">Continue Reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The attorneys at the law firm Shepherd, Smith, Edwards &amp; Kantas LLP are currently investigating claims of institutional investors involving swaps or other ongoing, inappropriate investments.\u00a0 Many companies, state municipalities, and other governments were talked into entering into swap transactions, either as a part of another securities transaction such as a new bond issuance, or [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3762,4104],"tags":[3115,3116,3110],"class_list":["post-6391","post","type-post","status-publish","format-standard","hentry","category-current-investigations","category-defective-swaps","tag-security-transaction","tag-security-based-swap","tag-ssek"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Defective Securities Swaps | SSEK Law Firm Blog<\/title>\n<meta name=\"description\" content=\"The attorneys at the law firm Shepherd, Smith, Edwards &amp; Kantas LLP are currently investigating claims of institutional investors involving swaps or other ongoing, inappropriate investments.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.investorlawyers.com\/blog\/defective-swaps\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Defective Securities Swaps | SSEK Law Firm Blog\" \/>\n<meta name=\"twitter:description\" content=\"The attorneys at the law firm Shepherd, Smith, Edwards &amp; Kantas LLP are currently investigating claims of institutional investors involving swaps or other ongoing, inappropriate investments.\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Shepherd Smith Edwards &amp; Kantas, LLP\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Defective Securities Swaps | SSEK Law Firm Blog","description":"The attorneys at the law firm Shepherd, Smith, Edwards & Kantas LLP are currently investigating claims of institutional investors involving swaps or other ongoing, inappropriate investments.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.investorlawyers.com\/blog\/defective-swaps\/","twitter_card":"summary_large_image","twitter_title":"Defective Securities Swaps | SSEK Law Firm Blog","twitter_description":"The attorneys at the law firm Shepherd, Smith, Edwards & Kantas LLP are currently investigating claims of institutional investors involving swaps or other ongoing, inappropriate investments.","twitter_misc":{"Written by":"Shepherd Smith Edwards &amp; Kantas, LLP","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.investorlawyers.com\/blog\/defective-swaps\/","url":"https:\/\/www.investorlawyers.com\/blog\/defective-swaps\/","name":"Defective Securities Swaps | SSEK Law Firm Blog","isPartOf":{"@id":"https:\/\/www.investorlawyers.com\/blog\/#website"},"datePublished":"2018-08-14T16:15:35+00:00","author":{"@id":"https:\/\/www.investorlawyers.com\/blog\/#\/schema\/person\/e0240e0754684b69f7d6a7de1b9f1431"},"description":"The attorneys at the law firm Shepherd, Smith, Edwards & Kantas LLP are currently investigating claims of institutional investors involving swaps or other ongoing, inappropriate investments.","breadcrumb":{"@id":"https:\/\/www.investorlawyers.com\/blog\/defective-swaps\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.investorlawyers.com\/blog\/defective-swaps\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.investorlawyers.com\/blog\/defective-swaps\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.investorlawyers.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Defective Security Swaps"}]},{"@type":"WebSite","@id":"https:\/\/www.investorlawyers.com\/blog\/#website","url":"https:\/\/www.investorlawyers.com\/blog\/","name":"Investor Lawyers Blog","description":"Published By Investment Fraud Attorneys \u2014 Shepherd Smith Edwards &amp; Kantas, LLP","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.investorlawyers.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.investorlawyers.com\/blog\/#\/schema\/person\/e0240e0754684b69f7d6a7de1b9f1431","name":"Shepherd Smith Edwards &amp; Kantas, LLP","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.investorlawyers.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/c7f8f04990816cd4044977eb59908da8c8d1ae487cc919cebd7027b74a0740a3?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/c7f8f04990816cd4044977eb59908da8c8d1ae487cc919cebd7027b74a0740a3?s=96&d=mm&r=g","caption":"Shepherd Smith Edwards &amp; Kantas, LLP"},"sameAs":["https:\/\/www.investorlawyers.com\/"]}]}},"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/pedX9K-1F5","_links":{"self":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/6391","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/comments?post=6391"}],"version-history":[{"count":0,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/6391\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/media?parent=6391"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/categories?post=6391"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/tags?post=6391"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}