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The Arbitrage Rebate Practice

The Math Verification Practice

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 initially formed over ten years ago as a result of KPMG's decision to discontinue providing services related to arbitrage compliance. With our recent opening of our Wisconsin office, we remain entirely comprised of management group members of former National Arbitrage Practices.

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 and trustees for tax-exempt bond issues.

Sample of Services

The Group members have provided the following services for thousands of engagements:

  1. Calculation of the rebate and yield reduction payments 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;

  2. Calculation of the penalty in lieu of rebate where the issuer has made such an election when tax-exempt debt was issued;

  3. Mathematical verifications of bond and investment yields and cash flows for debt restructurings associated with advance refundings of tax-exempt debt;

  4. Mathematical verifications of cash flow sufficiency from escrowed securities associated with the defeasance of existing debt; and,

  5. Mathematical 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/Work programs

The Arbitrage Group, Inc. utilizes time-tested, customized and reliable computer software that has been designed and updated. 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 ensure 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 both the Securities Industry Association and IRS treasury regulations.

The Group also utilizes the standardized work programs, which have been tailored and updated throughout the years. The work programs have been designed to insure that there is a comprehensive consideration of each regulatory or industry requirement, which might have an impact on the underlying computations. A work program 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.

Group Management Team

The Verification Practice is managed by Russell E. Moore and Laura D. FigueroaThe Arbitrage Rebate Practice is managed by H. Troy Merrill, Joe L. Aviles and Gregory A. IchelKelly M. Judice joined the Group in 2006 as a Senior Verification Analyst and provides invaluable assistance to both practices areas.

As members of The Group and their former national rebate practices, The Group has collectively completed thousands of arbitrage rebate, yield restriction, and mathematical verification engagements.


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