• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
Page
  1. 1
    1
  2. 2
    2
  3. 3
    3
  4. 4
    4
  5. 5
    5
  6. 6
    6
  7. 7
    7
  8. 8
    8
  9. 9
    9
  10. 10
    10
  11. 11
    11

The case is about the Monetta Financial Services Company, an investment house.

Extracts from this document...

Introduction

2006-04-0021


Executive Summary

The case is about the Monetta Financial Services Company, an investment house. The company has been charged by the Securities and Exchange Commission (SEC) of United States that it knowingly allocated “hot” IPOs to its own Directors and trustees instead of to its mutual fund clients. The case explains the process of issuing of the Initial Public Offerings (IPOs) in the United States’s capital market in addition to describing the critical role played by the investment bank or underwriters. The case highlights how the underwriters carry out the due diligence of the company, writes the prospectus and file the all important documents with the SEC. The case ends with the series of stock market data for IPOs in which Monetta participated and require the students to draft the brief for SEC enabling it to make a case against the company.

Brief for SEC

In order to draft a brief for the SEC that will help SEC to make its case against Monetta Financial Services, Inc. it is imperative to describe here the methodology and set of techniques that will be used to build the case.

Two major arguments will be used to establish that Monetta willingly and knowingly distributed “hot” IPOs to its directors. These are mathematical / statistical arguments using standard descriptive statistics and legal arguments based on the SEC Act.

...read more.

Middle

Kurtosis

-0.298852966

Skewness

0.632488126

Range

0.694

Minimum

0

Maximum

0.694

Count

50


Exhibit 2

Flipping Ratio Data Series

IPOs (Directors/Both)

Mean

0.190307692

Standard Error

0.01577989

Median

0.174

Standard Deviation

0.056895203

Sample Variance

0.003237064

Kurtosis

0.383093378

Skewness

0.17173002

Range

0.221

Minimum

0.081

Maximum

0.302

Count

13 IPOs

IPOs (Fund Clients)

Mean

0.295216216

Standard Error

0.02760873

Median

0.243

Standard Deviation

0.167937345

Sample Variance

0.028202952

Kurtosis

0.96144109

Skewness

1.165747672

Range

0.703

Minimum

0.085

Maximum

0.788

Count

37 IPOs

IPOs (Overall)

Mean

0.26794

Standard Error

0.021759603

Median

0.2305

Standard Deviation

0.15386363

Sample Variance

0.023674017

Kurtosis

2.143649271

Skewness

1.500169594

Range

0.707

Minimum

0.081

Maximum

0.788

Count

50


Exhibit 3

Mid-to-Offer Data Series

IPOs (Directors/Both)

Mean

21.9

Standard Error

4.429027213

Median

18.2

Standard Deviation

15.96908472

Sample Variance

255.0116667

Kurtosis

1.375573908

Skewness

1.058585971

Range

60

Minimum

0

Maximum

60

Count

13

IPOs (Fund Clients)

Mean

10.11351351

Standard Error

3.405602085

Median

9.1

Standard Deviation

20.71546875

Sample Variance

429.1306456

Kurtosis

2.888275781

Skewness

1.22609158

Range

107.3

Minimum

-27.3

Maximum

80

Count

37

...read more.

Conclusion

rsoft

Director

0.688

0.081

33.3

Wall Data

Both

0.25

0.186

33.3

Parallan Computer

Both

0.125

0.302

9.1

BHC Financial

Both

0.268

0.174

0

3DO

Director

0.233

0.153

36.4

Catalyst Semiconductor

Director

0.205

0.242

10

Auspex Systems

Director

0.292

0.245

9.1

Papa John's International

Both

0.385

0.17

18.2

Sunglass Hut International

Both

0.363

0.215

21.2

BroadBand Technologies

Both

0.431

0.163

12.5

Cyrix

Director

0.234

0.15

14.3

Wonderware

Both

0.321

0.239

27.3

NetManage

Both

0.656

0.154

60

Correlation Coefficient using the Return-to-Open and Flipping Data Series is as follows:

=CORREL(Ret-Open, Flipping) returns -0.675. The negative signs show that there exists inverse relationship between appreciations of share price on day 1 with the amount of shares sold in the block of 10,000 termed as Flipping.


Exhibit 5

Correlation Coefficient for IPOs allocated to Fund Clients

ISSUE

PORTFOLIO

Ret-Open

Flipping

Mid-Offer (%)

A Pea in the Pod

Fund

0.021

0.561

-14.3

Actel

Fund

0.184

0.229

0

Allied Holdings

Fund

0.018

0.124

0

ANTEC

Fund

0.333

0.232

20

Avid Technology

Fund

0.25

0.2

25

Broadcasting Partners

Fund

0.276

0.117

11.5

Cobra Golf

Fund

0.524

0.228

10.5

Coca-Cola FEMSA

Fund

0.098

0.273

13.9

Community Health Computing

Fund

0.1

0.395

-9.1

Cornerstone Imaging

Fund

0.318

0.149

18.9

CTL Credit

Fund

0

0.424

0

Envirotest Systems

Fund

0.078

0.407

6.7

Gupta

Fund

0.694

0.13

80

HomeTown Buffet

Fund

0.4

0.237

50

Inco Homes Corp

Fund

0

0.607

-9.1

Intuit

Fund

0.375

0.119

25

Key Technology

Fund

0.056

0.434

-18.2

Kurzweil Applied Intelligence

Fund

0.225

0.315

-9.1

The data provided here is truncated to save space. The figure below is for all 37 IPOs.

Correlation Coefficient using the Return-to-Open and Flipping Data Series is as follows:

=CORREL(Ret-Open, Flipping) returns -0.684. The negative signs show that there exists inverse relationship between appreciations of share price on day 1 with the amount of shares sold in the block of 10,000 termed as Flipping.


[1] Securities and Exchange Commission of US website

[2] Securities Regulation by David L. Ratner, 3rd Edition and SECLAW.com website

...read more.

This student written piece of work is one of many that can be found in our AS and A Level Probability & Statistics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Probability & Statistics essays

  1. The mathematical genii apply their Statistical Wizardry to Basketball

    a geometric distribution Let X be the number of attempts before a basket is scored for Lee: Probability of scoring a basket: P(score) = sample size/total number of shots = 80/269 = 0.2973977695 This implies X~G( 0.297 ) X can be modelled as a geometric distribution with a probability of scoring first time approximately equal to 29.7% (1 d.p.)

  2. Investigating the Relationship Between the Amount of Money a Football Club Receives and its ...

    Both methods which I have used suggest that there is basically no link between football trust grant and goal difference. Evidence for this is the fact that there is no correlation between the two on the scatter graph and the fact that standard deviation has shown that teams which receive similar grants do not have similar goal differences.

  1. Study of the height/diameter ratio of limpets inhabiting the middle shore region of exposed ...

    reduced; a larger foot and a lower height (0.366 being the mean). The frequency histogram is representative of this as it shows that most ratios tend towards the low values (the ranges 0.2-0.3, and 0.3-0.4 with 13 each) The low ratios will make the limpets more streamline in the water,

  2. Data Analysis of American House Price

    This report should help an investor to have a more clear background of which factor take into consideration before buying a house. 3. Introduction House and properties are ones of the fixed assets that have shown to have an increasing trend of value.

  1. Used Cars - What main factor that affects the price of a second hand ...

    4 SMALL 1200 17395 1 4999 5 SMALL 1200 2760 1 7399 6 SMALL 1300 19880 2 4499 7 SMALL 1300 51000 5 3495 8 SMALL 1400 40 0 8799 9 SMALL 1400 3548 0 7999 10 SMALL 1400 12470 2 7199 11 SMALL 1400 9540 1 9299 12 SMALL

  2. find out if there is a connection between people's IQ and their average KS2 ...

    For my new sample, I have drawn a new scatter graph (without the outliers). I have put a trendline onto my graph, this helps me see where the mean results are and I can find other pieces of data from it easily.

  1. I want to find out if there is a connection between people's IQ and ...

    You can see this on my graph. You might notice as well that the points on my graph are positioned in lines going downwards. This is because I was not given the raw scores of the KS2 SATs results;

  2. Case study -Super Savers is wishing to move into the UK Food Retail market.

    As Lyon, Francombe, Hasdell, Lawson (1992, p.73) pointed out, "... the null hypothesis states that two products are the same. However, two critical points to note are that two products are never the same and the null hypothesis (Ho) can never be accepted. The alternative hypothesis (H1)

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work