Securities Law Commons^™

Synthetic Cdos, Conflicts Of Interest, And Securities Fraud, Jennifer O'Hare

Jennifer O'Hare

Synthetic collateralized debt obligations (synthetic CDOs) nearly brought down the global economy by spreading the contagion of toxic assets throughout the financial system. Following the crash, government hearings exposed the ugly conflicts of interest inherent in the structuring of synthetic CDOs, as investment banks such as Goldman Sachs created, sold, and invested in synthetic CDOs, often at the expense of their clients. Some of the world’s largest financial institutions bitterly complained that these synthetic CDOs had been “designed to fail” by the investment banks, so that the investment banks could profit at their expense. In this article, I argue that …