I-Banking 2008

I. Investment Banking

i. Functions of Investment Banks

I. Investment Banking

a) Arranges financings for corporation and governments

b) Advises M&A Transactions

II. Sales &Trading

c) Client Trading

I. Sells and trades financial assets on behalf of investing clients

II. Operates (2)business units

I. Equity

II. Fixed Income, Currency, & Commodity

III. Provide research to investing clients

d) Proprietary Trading and Principal Investments

IV. Investment activity that affects firms accounts but doesn’t involve investing clients

V. Focused on investment in a) Equity, b) Bonds, c) Convertibles, and d)derivatives in manner similar to hedge funds and private equity firms

III. Asset Management

e) Offer a)equity, b)fixed income, c) alternative investments, & d)money market investment products and services to individual and institutional clients

f) For alternative investments, firm co invests with clients in a) hedge fund, b)private equity, and c)real estate funds

ii. Global

iii. Pre-Crisis Regulation:

I. 20 year period precipitating economic crisis saw dramatic change in nature of industry

II. Market forces pushed banks into considerable risk taking

III. High Level of risk taking combined with high leverage failed in 2008. The resultant affects were huge trade losses culminating in the failure of several large firms

IV. Pre Crisis Regulations:

IV. Securities Act of 1933 “Truth in Securities Law”

g) Requires investors receive significant info regarding securities for sale to public

h) Prohibit securities...