by Paul Springer

It takes a lot of chicanery to earn a permanent ban from the National Futures Association. But California Capital Trading Group pulled it off.

The firm and two of its brokers got the permanent shoe for a customer-crushing combination of bad trade recommendations and commission fluffing.

As the NFA puts it in its complaint, Whittier, Calif.-based California Capital “maximized commissions but left little opportunity for the customers to achieve and overall profit.”

The company did not dispute a variety of findings, including the NFA’s contention that fat commissions meant that trades typically feature a breakeven point in the 50% to 99% range.

Total round-turn fees were in the $90 to $95 range, way more than anyone needs to pay.

At the same time, the firm used the increasingly popular trick of trebling commissions by recommending mini e-trades when regular contracts would have made more sense – and generated fewer fees.

The NFA alleged that commission trebling was one of the maneuvers that earned broker Oscar Morales a permanent ban because of improper activities at California Capitol and Patriot Financial:

On Morales’ recommendation, [client] Tovenati purchased 45 mini-gold contracts. The same trading objective could have been accomplished with only 15 standard-sized gold contracts, as mini-gold contracts represent one-third of a standard gold contract. Morales’ advice resulted in Tovenati paying $3,735 in commissions and fees on the 45 mini-gold contracts when he could have traded 15 standard gold contracts for only $1,245 in commissions and fees.

And Tovenati lost $2,088 on the trade, in addition to fees. Tovenati deposited over $68,000 into his account in 14 months.

By the time it was over, the NFA says, the client had only $375 left. But Morales and California Capital had allegedly raked in over $51,000 in commissions.

In one pair of trades, Morales recommended a 10-lot call spread on gold and a 10-lot call spread on silver, trades with a 61.97% breakeven point. Morales claimed he had “insider information” that would double the client’s money. The client actually lost money on the trades – and paid $3,718 in fees.

The NFA banned Morales after he failed to respond to its accusations. Morales “lined his pockets with commissions without any regard for whether the trades were in his customers’ best interests,” according to the decision to ban him. “The Committee sees no purpose to be served by ever allowing Morales to have any future association with the NFA,” the decision says.

Broker Jason Lovely also received a permanent ban. Lovely allegedly told an NFA auditor posing as a customer that the customer would have to “unlearn everything he knows about trading” and stick to Lovely’s recommendations.

Lovely recommended option spreads, claiming the average customer made 10% on a monthly basis. In reality, the firm’s clients regularly suffered “substantial losses” on spread trades, the NFA says.

The NFA and CTFC have various documents warning retail customers about the risks of derivative investing. Maybe they just give people a copy of the NFA’s complaint in this case.

by Paul Springer

Regulators of all stripes have been coming down on forex and futures frauds, including one that involves conservative Christian radio host Pat Kiley.

In contrast to the typical forex trading bust, which may involve only a few retail clients and chump change, something nearer to $200 million was obtained from investors in the Kiley debacle, allegedly under fraudulent pretenses.

The Securites and Exchange Commission’s civil investigation started in 2009 and wouldn’t be news now except for one thing of considerable interest to the public – and the alleged perpetrators. The SEC says the U.S. Attorney in Minnesota filed criminal charges against three individuals: Bo-Alan Beckman, Gerald Joseph Durand, and Patrick Joseph Kiley.

Kiley is also the host of the Christian Radio show Follow the Money, the Star Tribune in Minneapolis says:

Conservative radio show host Pat Kiley claims he was just reading from a script when he told his worldwide radio audience in weekly broadcasts that he was a senior financial adviser and they could avoid financial Armageddon by entrusting him and his business partners with their money.

Criminal charges often come down the pipe after the beginning of a civil inquiry, but two years is a long time. Long enough to build a convincing case. Two other fellows, purported ringleader Trevor Cook and Christopher Pettengill, already settled. Cook agreed to pay $155 million in restitution.

The alleged dissipation of funds raised was more brazenly diverse than the usual fast cars and credit card bills, the SEC says:

The SEC alleges that Cook and Kiley misappropriated $42.8 million of investors’ money, including $18 million that Cook used to buy ownership interests in two trading firms; $12.8 million that Cook and Kiley transferred to Panama to purportedly finance the construction of a casino; $2.8 million that Cook used to acquire the Van Dusen Mansion and $4.8 million that Cook lost through gambling. Cook and Kiley also misspent approximately $51 million to make Ponzi-like payments to earlier investors. The SEC further alleges that Cook and Kiley placed $108 million of investors’ funds into banking and trading accounts in the names of their various shell companies and used some of this money to trade foreign currencies, resulting in losses of at least $48 million.

The National Futures Association announced a crack down on a smaller scale, but one that permanently barred Los Angeles firm Statewide FX from NFA registration. The principals can come back, but only after five years – and they have to pay $30,000 fines just to reapply.

In settling the case, the principals did not dispute various charges in the NFA’s complaint. The company’s brokers allegedly did not mention the fact that 95% of its customers lost money. Customers were advised to place trades that generated gains mostly in the form of commissions and fees.

Option and bull call spreads required returns of 30% to 50% just to reach a break even point.

The complaint cited ample trades:

100 September Eurodollar long put options that needed to make a return of 50% to break even; a 10 lot May 10 sugar #11 long put option that needed to make a return of 45% to break even; and a 15 lot March 10 Eurodollar long put option that needed to experience a 40% return to break even.

Not coincidentally, Statewide’s commissions tended to equate roughly with client losses. Behold the fee structure as a wealth transfer mechanism!

The Commodity Futures Trading Commission isn’t idling this summer either. The commission just put the clamps on a commodity futures Ponzi scheme in California and forex fraud with operations in New York.

The Ponzi targeted Spanish-speaking investors who were told they would double their money. The CFTC says one alleged perpetrator, who used customer money to buy a Mercedes and pay for airline tickets, won’t be taking any long trips in the near future — thanks to an 11-year prison sentence.

The CFTC started the other case against Forex Capital Trading Group, Forex Capital Trading Partners, and Highland Stone Capital Management. The alleged scoundrels enticed customers with reports of 51% gains. In reality, the commission says, customers lost 86% of their money.

by Paul Springer

The idea of trading listed stock warrants tends to excite yawns in the U.S., but the equity- linked warrant (ELW) market on the Korea Exchange (KRX) has been getting hotter than the proverbial pistol. Too hot, in fact, for traders recoiling at the prospect of new margin requirements, and for brokerage chiefs who are now on trial for allegedly letting scalpers scalp retail ELW investors.

In contrast to options, warrants are issued directly by corporations. Both put and call warrants are available on the KRX, and last year the exchange implemented a “knock-out barrier” feature on some securities that protects investors with a combination of floor prices and automatic exercise.

The chiefs of 12 securities firms are on trial for allegedly allowing unfair ELW trading according to an account from Korea JoongAng Daily that says those in court include the the bosses of Hyundai Securities Co., Samsung Securities Co., and Daishin Securities:

The main dispute lies in the brokerages’ practice of providing such in-and-out traders with direct use of the brokerage’s dedicated lines, allowing more split-second advantages in buying and selling ELWs than a run-of-the-mill home investor.

Figures provided by Korea JoongAng indicate that in 2009 scalpers with direct market access reaped over $100 million, while retail investors lost about $490 million.

The Korean Financial Services Commission reported on its blog last month that the Seoul Central District Prosecutors’ Office had begun a criminal investigation into possible collusion between brokerages and day traders.

Korea’s ELW market is large and liquid, Reuters said. But the little guy can get eaten alive:

Korea’s warrants market is the world’s second biggest in volume terms, but the extremely high turnover disguises the fact that the vast majority of positions come from day trading. Although the turnover level is around 70% that of Hong Kong, open interests – the actual positions that are carried over at the end of each day – are only 15%-20% of those of its North Asian rival. “If it just went to day traders, the market could become very unprofitable and disappear,” said one Korean banker.

Starting Aug. 1, ELW traders will face a minimum margin requirement of about $14,000 that they did not have before. In contrast, options and futures trading on the KRX already requires a margin deposit.

Meanwhile, the trial of securities executives will go forward.

If translated to U.S. markets, the trial would be something like a financial episode of The Twilight Zone… Imagine, if you will, a trial where mighty heads of U.S. brokerages were being prosecuted for letting high-frequency traders rack up huge gains while running over retail traders. Right.

by Paul Springer

A recent enforcement action by the National Futures Association shows how uneducated traders can sustain wallet-flattening losses from trades specifically structured to benefit brokers at the expense of clients.

California Capital Trading Company (CCTC) and two of its principals continue to deny NFA allegations that they rigged losing trades with the intent of generating huge commissions.

One broker, Oscar Morales, was banned by the NFA after he failed to respond to allegations of improper solicitation practices.

However, the claims currently being prosecuted by the NFA highlight some trade commission issues that are relevant to pretty much anyone who trades futures.

The NFA says an audit revealed that over 95% of CCTC clients lost money in 2008 and 2009, while much of that loss was in the form of commissions and fees paid to the company.

The standard commission of $83 was steep itself but rose to as much as $95 with additional charges. In contrast, many online brokers offer commission of 10% or less than that amount.

The real problem for clients, the NFA alleged, was that the high commissions put trades in such a huge hole that only double-digit returns could get to the break-even point.

Clients had to achieve returns of 50% to 99% just to break even, the NFA said.

The approximately 100 small accounts serviced by CCTC had losses of around $147,000 in 2008 and $650,000 in 2009. But 70.4% of the 2008 and 55.3% of the 2009 losses were commissions and fees.

CCTC clients knew little about futures trading and consequently relied on trading recommendations from brokers, the NFA said.

Those recommendations, and particularly those of barred broker Morales, “maximized commissions but left little opportunity for the customers to achieve an overall profit,” the NFA said:

Examples include the use of out-of-the-money bull call option spreads, the trading of mini-contracts that multiplied commission expenses when trading standard contracts could have achieved the same economic purpose at substantially lower trade costs and investing virtually all of a customer’s equity immediately…

The allged abuse of mini-contracts is striking. Mini-contracts were designed to facilitate trading for people with limited capital, but they just multiply commissions when used improperly.

One customer relied on a broker recommendation to buy 45 mini-gold contracts:

The same trading objective could have been accomplished with only 15 standard-sized gold contracts… Morales’ advice resulted in [the client] paying $3,735 in commissions and fees on 45 mini-gold contracts when he could have traded 15 standard gold contracts for only $1,245 in commissions and fees.

The 45 lot mini-gold contracts ultimately received a net loss of $2,088 on top of the $3,735 in transaction costs.

The NFA alleged that one customer highlights the  losses from high commissions. The customer deposited over $68,000 and ended up with $275. He was charged more than $51,000 in commissions.

While CCTC is contesting the NFA’s claims and said in reply documents that it does not have time to monitor every broker’s conversations, the allegations provide food for thought in the area of commissions – and trust.

by Paul Springer

The debt crisis in Europe is like a high stakes game of musical chairs – which nation will be the next to default when the music stops?

It’s hard to tell which country is in the worst shape, but bond trading reveals increasing concerns with debt issued by Portugal, Ireland and Greece. Financial Times reports that trading volume has dived as market players gird themselves for blowback from a possible bailout of Greece. Today, Reuters reported that Standard & Poor’s cut Greece’s rating, making it the lowest-rated country in the world by its standards.

While opportunity exists to buy distressed sovereign debt at a discount, many big traders are fleeing the venue.

Large banks have backed away almost entirely, according to The Guardian:

Figures from the Bank of International Settlements (BIS) show French, German and UK banks have embarked on a mass exodus from Greece, Portugal, Spain and Ireland, in what analysts see as an effort to bolster their balance sheets and conform to new rules designed to protect financial institutions from going bust.

It’s one big mess where any one party’s actions can have drastic effects on another’s situation. Now France and Germany are jockeying to maintain their own interests in the face of a Greek restructuring according to The Guardian’s analysis of players, including France’s finance minister Christine Lagarde:

[Lagarde] and her German counterpart, Wolfgang Schäuble, have been blamed for blocking a restructuring of Greek debt to maintain the solvency of their own banks.

Last week Schäuble reversed Berlin’s previous opposition and put forward a restructuring plan that involved Greece’s major private sector lenders, including banks. But he is understood to have met stiff opposition from Paris.

In this maelstrom of competing interests, Bloomberg reports that credit default prices are rising fast, partly driven by fears that no solution can be found for Greece’s problems:

Swaps on Ireland soared 32 basis points to 745, Portugal climbed 28 to 770 and Greece jumped 47 to an all-time high 1,610, according to CMA. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments jumped 8.5 basis points to 219, approaching the record 221.75 basis points set Jan. 10.

Bloomberg added that the cost of insuring European corporate bonds also increased:

Contracts on the Markit iTraxx Crossover Index of 40 companies with mostly high-yield credit ratings increased 8 basis points to 408, the highest since March 17, according to JPMorgan Chase & Co. The index is a benchmark for the cost of protecting bonds against default and an increase signals deteriorating perceptions of credit quality.

Dow Jones reported last week that Moody’s analysis suggests that a Greek default could bring about a domino effect including defaults for Ireland and Portugal.

Ominously, Dow Jones notes, a restructuring of Greek debt could backfire unless it avoids a downgrade of the debt:

Key to any voluntary swap of Greek debt would be avoiding a so-called credit event or downgrade of Greek debt by ratings companies, which could force the ECB to end its liquidity provision to Greek lenders. That in turn, could spark a local banking crisis by cutting off Greek banks from much-needed funding.

And Reuters finds that Cyprus could get sucked into the vortex with Greece, thanks to exposure to Greek debt.

The whole thing may blow over, but there’s a good chance it could just blow up instead. For a view from the dark side, read economist Megan Greene’s guest blog post at The Guardian. Greene says it’s shake-up or break-up for both the EU and the Euro, both of which she says could implode amidst political infighting:

If fiscal union is not on the cards, the only other option is eurozone breakup. Imbalances in the euro area will pull the monetary union apart. This could either take place all at once, or it could involve peripheral or core countries peeling off from the eurozone individually.

A eurozone breakup would result in a widespread series of defaults, bank runs, capital controls and periods during which countries (and their banks) would be frozen out of the markets. It would be extremely messy.

While the average investor in the U.S. can do nothing to alter the course of these developments, now is a good time to take a hard look at any global or international investments involving foreign debt – or equity for that matter.

Editor’s note: This story has been updated from an earlier version today.

by Paul Springer

Below is a survey of options ideas and strategies culled from what’s out there so far this week. Some are specific to a single underlying or a specific technique, while others are based on a broader view.

The big picture is presented in this detailed article by hedgetracker.com contributor Simon Kerr, who explains why zero-cost options sometimes sound like a good idea – but not necessarily the best. A small part of the argument:

Further it is plain that in order to put them on portfolio managers or traders are quite conceivably having to compromise their own market view in some dimension to accommodate the implied view of the zero-cost option strategy. So the real cost of the zero-cost strategy is not the premium expended, which by definition is nil, but the potential for a significant compromise with the actual market view of the risk taker.

The OptionsInsider recaps SPX activity last week and considers what might be instore during expiration week: possibly another decline after an oversold bounce.

ResourceInvestor develops a strategy to avoid a “potentially devastating” SPX trade in the near future.

Seeking Alpha takes a look at the Alpha Index options for Apple Computer (AAPL). Nasdaq’s Alpha Indexes measure the performance of a single stock against a relevant index, and a variety of options strategies are evolving around the Apple/SPY index.

Playing in Chinese company stocks is a lot like playing Russian roulette these days, but this Business News Network piece describes using a straddle to profit from Sino-Forest Corp.’s grief from analyst/research service Muddy Waters.

Tobacco monger Reynolds American (RAI) may be poised for a resurgence, according to Schaeffer’s Options Center’s analysis of near the money put writers activity after Morgan Stanley upgraded Reynolds and downgraded competitor Lorillard (LO).

Never was the word ‘naked’ scarier than in the term “naked option,” but a SeekingAlpha contributor explains how to get naked without exposing oneself unnecessarily.

Bloomberg notes that Best Buy call option rose four-fold after activist investor Bill Ackman’s Pershing Square Capital was said to have bought a stake in the company. Some might regard that as a sell signal.

Trading in GM is a snoozer according to InvestorPlace, but OptionsMONSTER data indicates that Harley Davidson (HOG) may be poised to take a ride.

And for those who hoped to start trading S&P options electronically on a proposed CBOE platform this month – fuggedabout it. The exchange said in a release that the Securities and Exchange Commission wants more information before letting the new platform get started.

by Paul Springer

Commodity pool operator Vision Financial Markets generated $13.5 million in commissions in the first half of 2010, according to a National Futures Association action that alleges trades were designed to generate huge commissions with strategies unlikely to pay off for clients.

It’s the fourth NFA complaint against Vision, which previously settled actions in 1993, 1996 and 2000. The NFA also issued five complaints last year against brokers guaranteed by Vision.

The firm charged as much as $99 in commissions for a single futures contract, a steep fee at a time when discount brokers offer commissions in the $2 to $5 range, including exchange fees.

Of course it’s worth paying a commission if it’s paying for a winning trade. In this case, the NFA says, principals routinely ignored information indicating that brokers were churning retail accounts.

Clients were allegedly charged stiff fees for trades with a very low likelihood of a positive outcome, which is exactly the kind of advice the NFA has been against since the early 1990s. Back then, the regulator started issuing statements noting that a preponderance of large spreads, butterfly spreads, and deep, out-of-the-money options trades suggest an intention of trading for commissions, not client profits.

In this case, clients were enticed with the prospect of returns as high as 200%. An ad on a MySpace page trumpeted, “$1,000,000 is possible!” And it was true too, if you take that as $1 million in losses.

In 2007 and 2008, the NFA says, 92% of customers of one Vision unit lost a total of more than $1.2 million.

And new customers were not advised that existing ones routinely suffered huge losses.

One individual’s IRA account was “traded down” from around $335,000 to under $8,000.

Another customer deposited his entire $31,541 IRA account with Vision and was charged more than $11,000 in commissions on the first day of trading.

Recommended strategies used to generate the commissions included bull call option spreads with high breakeven points that made it unlikely clients would turn a profit. On average, the NFA says, clients would have had to achieve returns in excess of 30% just to break even on the fees. In some cases, the breakeven point on commissions came only when the trade generated a 70% return.

According to the NFAs account, IRA accounts were routinely solicited for risky trading. Supervisory principals allowed this solicitation, knowing that “virtually all” the IRA customers lost money.

Vision did not dispute allegations in reaching a $500,000 settlement with the NFA. The company agreed to improve its supervisory procedures – within 180 days of the settlement.

That could be a long 180 days for an IRA.

by Paul Springer

POTATO is the symbol for potato futures on India’s National Commodity & Derivatives Exchange. This piece of information may not be universally known today, but potato trading is getting more interesting for players all over the world, thanks to U.S. government efforts to eliminate the potato from school lunch menus.

Potato critics say kids should be eating healthier vegetables.

As other commodities jostle to horn in on the spud’s diminishing market share, the markets are getting an extra shot of volatility from a campaign to cast McDonald’s fast food shill, Ronald McDonald, as the equivalent of a pimp for unhealthy chow. The Wall Street Journal reports that a consortium of health professionals and groups have asked the restaurant chain to retire its iconic clown mascot.

While schools are not responsible for the lion’s share of potato buying, the U.S. Department of Agriculture’s move to yank them from menus has stirred up potato potentates in many forms.

Many people are annoyed by the “war on fries,” according to The Washington Post, which says 40 members of Congress signed a letter in support of the lowly potato.

Elswewhere, criticism took on darker tones. An account from theKalamazoo Gazette is entitled “Potato industry fried by Big Brother’s move to keep taters from tots.”

And the rest of the government is being dragged into the debate. From HotAir.com:

And to think, some people find the Obama administration to be a bit of a drag. Here’s the National Potato Council’s ode to the school-lunch spud; Ed wrote about the “war on potatoes” back in October and what it might portend for greater government intrusion into dietary choices… The next step, I take it, will be to make five-year-olds keep daily diaries on one of those online calorie-counting websites, and then somewhere down the road we’ll presumably eliminate the middle man and just chip ‘em to make sure they’re not overeating.

See The Week for differing opinions.

And while the fate of the potato in American schools is still up in the air, potato dealers in Europe are now facing a tariff on potato starch importing to China, Xinhua says.

Potato trading somehow lacks the allure of gold or even pork bellies, but there may be a storm coming for potato selling companies like ConAgra and all manner of potato buyers ranging from restaurant chains to chip makers like Pepsi-Cola’s Frito Lay.

Could the humble potato have the makings of a major financial drama? Unlikely as it sounds, the answer could be yes.

Hop in the time machine and take a ride back to 1976, when “Idaho Potato King” Jack Simplot got himself involved in what Time Magazine called, “the biggest potato-futures default in the 104 years of the New York Mercantile Exchange.”

Potato short sellers were involved, and Simplot’s obituary in the Associated Press said he paid a fine and received a six-year trading ban for manipulating Maine potato futures.

So potato trading may not sound glamorous. But like any other kind of commodity, it can get you, well, fried if you’re not careful.

by Paul Springer

Anyone can put up an investment website claiming outsized returns. But many of these websites are fronts for unscrupulous individuals who have potent reasons for remaining anonymous.

The National Futures Association said in a regulatory action that it found evidence of deceptive communication on the website of Carrolton, Texas-based commodities advisor FIN FX LLC. Then it learned of a shadow principal in addition to the registered principal. Both were allegedly evasive in dealing with the NFA, the agency claimed, and the pair may have moved back to South Africa – where they had already been in trouble with regulators once before.

An individual who was skeptical about claims on the FIN FX website contacted the NFA, which immediately used Google to visit the site. A variety of trading programs offered annual returns as high as 116%, and an individual in a mini-forex trading contest purportedly had achieved a 354% return.

Mini-forex accounts are like the malt liquor of retail investing – they’re seemingly cheap, initially pleasing, and likely to cause the mother of all financial hangovers.

When the NFA started asking questions, the FIN FX principal said that the trading programs and contest had actually been offered by an unrelated trading firm, so FIN FX was claiming huge returns for programs it had nothing to do with.

Further inquiries indicated that the principal did not live in the Texas address he claimed. And a visit to the company itself led to an aviation support business owned by a second South African person.

Subsequent telephone conversations with the two individuals – who spoke to each other in a language unfamiliar to the investigators – confirmed that in 2005 the High Court of South Africa had accused the pair of soliciting $12.5 million for two entities known as Webforex, the NFA said in the action. The two allegedly squandered the millions and did not provide the NFA with evidence to back up claims that the charges had been dropped.

The NFA obtained emergency authority to shut down FIN FX and prohibit the transfer of funds on its books.

If the NFA’s allegations prove true, the two individuals engaged in quite the globe-trotting lifestyle, leaving South Africa for Texas to avoid regulators on one continent, and then reprising the move to dodge the NFA.

Sadly, the alleged fraudsters appear to have avoided serious consequences on both continents. And racked up some serious frequent-flyer miles in the process.

by Paul Springer

It will take years to sort out the physical and financial damage from Japan’s huge earthquake in March. But the destruction for catastrophe (CAT) bond players was not as great as investors might expect from such a cataclysmic event.

The market for CAT bonds was designed to allow risk spreading around natural disasters. The market brings exposure to unusual circumstances that may offer little correlation with more commonly traded assets.

At the same time, investing in CAT bonds can be risky for obvious reasons, and investors in some of the securities may lose their principal immediately if a triggering disaster occurs.

Solidum Partners Chief Risk Officer Karsten Bromann talked to Finance IQ, revealing some surprises about the earthquake.

Not surprisingly, some CAT instruments did get crushed.

Bromann noted principal loss in Munich Re’s Muteki Ltd. notes issued in 2008. These are parametric bonds, meaning they are triggered by physical parameters of the quake, not dollar losses claimed by an industry or region. The bond’s parameters were such that investors will lose out to a much greater extent than the industry was damaged in the region.

Bloomberg reports that the Muteki noteholders are likely in for a total loss.

The collateralized reinsurance sector took a worse beating than primary reinsurance markets, perhaps providing another indication of the dangers inherent in packing up securities in ways that may be difficult for buyers to analyze for risk.

Location can have some startling effects on CAT bond valuations and performance, Bromann says.

What’s really surprising is how much worse the financial destruction could have been:

Even The Great Tohoku Earthquake is deemed a 1 in 80+/- year event when considering its insured loss cost in Japan – a much smaller earthquake nearer to higher insured values e.g. Tokyo would create a greater insured loss figure than the powerful M9.0 Great Tohoku Earthquake.

When it comes to financial devastation, Bromann says, the scope of the disaster would be far greater if a wind-driven disaster of comparable proportions struck on this side of the Pacific:

Considering the extensive coverage the [quake] rightfully got, the impact on the Cat Bond segment could even be viewed as relatively small. A similar return-period event for the U.S. wind would create a completely different outcome, given the 60%+ of all Cat Bonds . . . being exposed to U.S. Wind.

Bloomberg reports that a new Munich Re windstorm risk bond was issued not long after the Tohoku event:

The bond was priced at the higher end of guidelines, although it was in its marketing period when Japan’s earthquake struck, said one UK-based broker with knowledge of the transaction.