Concise explanations of financial terms commonly used by commercial practitioners.

A recent Wall Street scandal has brought the term Ponzi scheme into the news again. Named after Charles Ponzi, a Ponzi scheme is a fraudulent investment scheme promising high rates of return with minimal risk. Typically, it generates returns by acquiring new investors whose investments then become the returns promised to early investors. [read more]

In commercial transactions, one worry common to both buyers and sellers is the unexpected costs that may arise after closing. To avoid these types of problems the parties may elect to set forth ground rules in the Sales Purchase Agreement (“SPA”) in the form of a basket and cap (sometimes cap and basket) provision. [read more]