Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Wellington probed by Feds in insider trading investigation
Old 11-27-2010, 12:41 PM   #1
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,887
Wellington probed by Feds in insider trading investigation

I don't know if many are following the threads on this at the Bogleheads forum. Apparently the feds are investigating Wellington Management, which manages the Vanguard Wellington and Wellesley funds among others. Major investment firms subpoenaed in insider trading probe - latimes.com

Consensus on the Bogleheads board seems to be that there is no reason to panic and sell, but that one should keep an eye on this situation.

It seems to me that if Wellington is eventually found guilty of insider trading, share prices of Wellesley could drop. A lot of our members have substantial holdings in Wellesley so the current investigation might be a good topic for discussion.
__________________

__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-27-2010, 12:46 PM   #2
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
I don't see why share prices of a mutual fund would be greatly affected unless there is so much selling of this fund that it puts pressure on the securities it owns.
__________________

__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is online now   Reply With Quote
Old 11-27-2010, 12:49 PM   #3
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,887
Quote:
Originally Posted by ziggy29 View Post
I don't see why share prices of a mutual fund would be greatly affected unless there is so much selling of this fund that it puts pressure on the securities it owns.
Good point, although it is hard to imagine that Wellington might not pass on some of their losses in increased fees. Maybe they really can't. And also, as you pointed out, there could be a lot of selling of the fund. It seems to me that some mutual funds and/or mutual fund management companies got caught up in the Enron debacle though my memory of this is hazy. Of course that was a different situation.

Also, I am thinking that if Wellington fails, Vanguard would just get someone else to manage these funds.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is online now   Reply With Quote
Old 11-27-2010, 02:12 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
There have been some arrests at some firms

The Associated Press: Big New York insider trading probe spawns another



The Insider-Trading Investigation: A Primer


http://online.wsj.com/article/SB1000...%3Dinteractive
__________________
chinaco is offline   Reply With Quote
Old 11-27-2010, 02:28 PM   #5
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,107
W2R, you sure know how to get my attention. I have 60% of my nest egg in Vanguard Wellesley and Wellington Funds.

I'm hoping the news that Wellington Management "...received requests for documents from federal investigators looking into insider trading" is nothing more than a fishing expedition by the Feds. That may be the case if we can believe news reports that Wellington, Janus and SAC were asked for info while several hedge funds apparently had the FBI show up with search warrants.

But then there is this troubling comment:

Quote:
“This is going to go beyond hedge funds,” said Stewart Massey, chief investment officer at Massey, Quick & Co. in Morristown, New Jersey, which manages $2 billion on behalf of endowments, foundations and wealthy families. “This is going to involve traditional money managers also.”
I have no idea how this might impact the value of funds managed by Wellington. My worst fear is we learn the true meaning of Unclemick's "pssst -Wellesley" is that's the sound we hear as the air goes out of the share price.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 11-27-2010, 02:41 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
easysurfer's Avatar
 
Join Date: Jun 2008
Posts: 7,887
I have Wellington for my HSA. So the sound I might hear would be Pssst..Code Blue...Wellington
__________________
Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
easysurfer is offline   Reply With Quote
Old 11-27-2010, 02:47 PM   #7
Thinks s/he gets paid by the post
DblDoc's Avatar
 
Join Date: Aug 2007
Posts: 1,224
Adds a whole new meaning to "Psst Wellesley"

DD
__________________
At 54% of FIRE target
DblDoc is offline   Reply With Quote
Old 11-27-2010, 03:15 PM   #8
Thinks s/he gets paid by the post
73ss454's Avatar
 
Join Date: Oct 2004
Location: LaLa Land
Posts: 4,378
This is nuts! Between this info and Pen Fed sending a members money to the state I think we will have to start thinking Mattress Money at some point.

Maybe Dex had some inside info going to all cash.
__________________
73ss454 is offline   Reply With Quote
Old 11-27-2010, 03:33 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Quote:
Originally Posted by 73ss454 View Post
This is nuts! Between this info and Pen Fed sending a members money to the state I think we will have to start thinking Mattress Money at some point.

Maybe Dex had some inside info going to all cash.
LOL I was thinking the same thought, the only thing missing is that Buffett is actually being running a Ponzi scheme all of these years.

Remember to buy guns, ammo,and MREs with some of your mattress money.
__________________
clifp is offline   Reply With Quote
Old 11-27-2010, 03:44 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by 73ss454 View Post
Maybe Dex had some inside info going to all cash.
Unless it's all at PenFed.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Old 11-27-2010, 03:50 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by REWahoo View Post
I have no idea how this might impact the value of funds managed by Wellington.
I see no reason why it should. The NAV is based on the value of the assets it holds, not any promise or obligation from Wellington. There is possibly some liquidity risk in the portfolio if a bunch of folks start heading for the exits. But the most likely downside risk is that Wellington sells its book of business to someone else who hasn't gotten caught cheating yet doesn't cheat.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Old 11-27-2010, 05:36 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Dawg52's Avatar
 
Join Date: Feb 2005
Location: Central MS/Orange Beach, AL
Posts: 7,437
Quote:
Originally Posted by REWahoo View Post
My worst fear is we learn the true meaning of Unclemick's "pssst -Wellesley" is that's the sound we hear as the air goes out of the share price.
He's been trying to warn you for years. What do you thing he meant by 'pssst Wellesley'? Plus he sold his years ago.
Attached Images
File Type: jpg 450_melting_070825.jpg (81.1 KB, 2 views)
__________________
Retired 3/31/2007@52
Full time wuss.......
Dawg52 is offline   Reply With Quote
Old 11-27-2010, 05:39 PM   #13
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,887
Quote:
Originally Posted by REWahoo View Post
W2R, you sure know how to get my attention. I have 60% of my nest egg in Vanguard Wellesley and Wellington Funds.
Yes, so many of us have a great deal in Wellesley and Wellington and that is why this information got my attention, too. I have 31% in Wellesley (it's supposed to be 30% according to plan). My plan doesn't allow more than 30% in anything due to concerns about having too many eggs in one basket. On the other hand, I'd hate to risk that 30% (and the great income I have been getting from it).

There are two threads on this on the Bogleheads board, where most seem to agree with Ziggy29 and Gone4Good:
Quote:
Originally Posted by Gone4Good
I see no reason why it should. The NAV is based on the value of the assets it holds, not any promise or obligation from Wellington. There is possibly some liquidity risk in the portfolio if a bunch of folks start heading for the exits. But the most likely downside risk is that Wellington sells its book of business to someone else who hasn't gotten caught cheating yet doesn't cheat.
Still, I thought it might be a good idea to keep an eye on the situation. Each financial disaster that occurs seems to be something that never happened before quite that way, if you know what I mean. So while I am not running off and selling Wellesley shares, I am feeling cautious and want to stay informed.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is online now   Reply With Quote
Old 11-27-2010, 05:43 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
Quote:
Originally Posted by Gone4Good View Post
Unless it's all at PenFed.
Or the Fed Pen...
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 11-27-2010, 06:46 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
This does point up one difference between a "conventional" MF and a closed-end fund or an ETF. The later two could suffer a significant drop in value, at least in the short term, if the management has been caught in a scandal. The share price of a traditional MF is based strictly on the value of the underlying assets.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Old 11-27-2010, 06:51 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,409
Quote:
Originally Posted by samclem View Post
The share price of a traditional MF is based strictly on the value of the underlying assets.
Yes. Assuming that there is really any asset.








Just kidding to scare y'all. :-)
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is online now   Reply With Quote
Old 11-27-2010, 07:26 PM   #17
Thinks s/he gets paid by the post
FIRE'd@51's Avatar
 
Join Date: Aug 2006
Posts: 2,315
Quote:
Originally Posted by samclem View Post
This does point up one difference between a "conventional" MF and a closed-end fund or an ETF. The later two could suffer a significant drop in value, at least in the short term, if the management has been caught in a scandal. The share price of a traditional MF is based strictly on the value of the underlying assets.
While this may be true for an actively managed closed-end fund, I would think the market would quickly arbitrage away any significant difference from NAV of an ETF.
__________________
I'd rather be governed by the first one hundred names in the telephone book than the Harvard faculty - William F. Buckley
FIRE'd@51 is offline   Reply With Quote
Old 11-27-2010, 08:57 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by samclem View Post
This does point up one difference between a "conventional" MF and a closed-end fund or an ETF. The later two could suffer a significant drop in value, at least in the short term, if the management has been caught in a scandal. The share price of a traditional MF is based strictly on the value of the underlying assets.
Forget ETFs, remember ETNs . . . Exchange Traded Notes. Those were the great innovation where a bank would issue a bond and bundle it with futures contracts to create a funded security that behaved like the futures contracts. The only small problem was if the issuing bank went under all the investor owned was a senior unsecured bond of the defaulting bank and a futures contract, which may or may not be in the money. Oops.

Imagine thinking you had invested in the S&P 500 or a portfolio of commodities only to learn that it was mostly just a loan to Lehman.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Old 11-27-2010, 10:35 PM   #19
Thinks s/he gets paid by the post
teejayevans's Avatar
 
Join Date: Sep 2006
Posts: 1,221
The worst that could happen is that holders of the W. funds would have to pay a fine because they benefited from insider trading. Since the both funds have rather stable holdings, I'm guessing any perceived benefit would be low. I would be interesting to see if the holdings have change in the last 5 years and the "timing" of those changes. BTW, Wellington does a lot more than just Vanguard funds, so those funds may not be effected at all.
BTW, its too late to sell, the feds will look at the effected period to assess any fines.
TJ
__________________
teejayevans is offline   Reply With Quote
Old 11-28-2010, 11:54 PM   #20
Thinks s/he gets paid by the post
target2019's Avatar
 
Join Date: Dec 2008
Posts: 3,708
Wellington isn't the target of the investigation as best I can tell. Should the thread title be changed?
__________________

__________________
target2019 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Screwed by the Feds.. Westernskies Other topics 26 03-11-2009 03:03 PM
Feds lower interest rate Keyboard Ninja Young Dreamers 2 10-31-2008 04:13 PM
Congressional Investigation? Fireup2020 Other topics 9 10-27-2008 02:26 PM
Annuities Investigation on Dateline this Sunday WanderALot FIRE and Money 46 04-14-2008 08:07 PM
Insider Trading? grumpy FIRE and Money 6 03-09-2006 03:59 PM

 

 
All times are GMT -6. The time now is 07:18 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.