The Arbitrage Group and Its Partners

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The Group

The Arbitrage Group, Inc. ("The Group") is an established set of professionals totally dedicated to providing arbitrage rebate and mathematical verification services on a national basis for its' clients. The Group was formed during August of 1998 as a result of KPMG's decision to discontinue providing services related to arbitrage compliance. The Group is comprised exclusively of the management group members of KPMG's former National Arbitrage Practice.

The members of The Group have received specialized industry training, have extensive experience in the industry, use the most modern computer technology to enhance service delivery capabilities, maintain a current working knowledge of the regulatory requirements, and are committed to delivering quality services to their clients. The client base of The Group is comprised of issuers and borrowers of tax-exempt debt; and financial advisors, underwriters, and attorneys for tax-exempt bond issues.

Sample of Services

As members of The Arbitrage Group, Inc. and KPMG, the following services have been provided for thousands of engagements:

Calculation of the rebate due to the Internal Revenue Service where funds received from the issuance of tax-exempt debt have been invested in non-purpose investments and arbitrage earnings have occurred;
Calculation of the penalty in lieu of rebate where the issuer has made such an election when tax-exempt debt was issued;
Arithmetical verifications of bond and investment yields and cash flows for debt restructurings associated with advance refundings of tax-exempt debt;
Arithmetical verifications of cash flow sufficiency from escrowed securities associated with the defeasance of existing debt; and,
Arithmetical verifications of cash flow sufficiency associated with the restructuring of investment portfolios held in escrow (swaps) performed to increase investment efficiencies of the escrow.

Software/Workprograms

The Arbitrage Group, Inc. utilizes the customized computer software designed and tested by KPMG. The customized computer software operates on a Sun Microcomputer utilizing a UNIX operating environment to assist the professionals in this practice to deliver services in a timely fashion and cost effective manner to their clients. This software, which includes various processing routines to insure the accuracy of data input into the system and processing by the system, has been designed and thoroughly tested to conform to the regulatory requirements and the standard securities calculation methods established by the Securities Industry Association.

The Group also utilizes the standardized workprograms which were designed by KPMG in performing their work. The workprograms have been designed to insure that there is a comprehensive consideration of each regulatory and/or industry requirement which might have an impact on an arithmetical computation. A workprogram must be completed for every client engagement and the results achieved by application of the procedures specified in the workprogram are verified by an objective reviewer. These procedures provide assurance that all matters affecting a computation or set of computations have been properly considered.

The Partners

The Arbitrage Group, Inc. is managed by four partners. Russell E. Moore and Laura D. Figueroa manage The Verification Practice. H. Troy Merrill and Joe L. Aviles manage The Arbitrage Rebate Practice. Kelly M. Judice joined the Group in 2006 as a Senior Verification Analyst.

As members of The Group and former associates of KPMG, the partners of The Group have collectively completed over 1,000 arbitrage rebate or penalty in lieu of rebate computation engagements and over 1,600 mathematical verification engagements since 1990.

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