Magnetar told investors this week that it based its mortgage-CDO strategy on statistical models, not a fundamental belief that the housing market would slide.
According to the SEC, Goldman and one of its vice presidents, Fabrice Tourre, in 2006 and 2007 developed marketing materials for the synthetic CDO Abacus 2007-AC1.
These GSEs cooked their books, and innovated robo-automated-fraudulent-CDO mortgage financing.
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Many banks cut the value of their super-senior CDO holdings to around 80% of face value at the end of the third quarter, according to one market participant.
The SEC enforcement action deals with only one so-called Abacus CDO, but there were others.
We intend to target suitable structured product investors who have previously participated in ACA-managed cashflow CDO transactions or who have previously participated in prior ABACUS transactions.
The third effect will be on the collateralised-debt obligation (CDO) market, which caused so many problems last year.
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Collateralized debt obligations (CDO) and other structured finance products trade over-the-counter rather than on an exchange, at least in the United States.
The day the suit was filed, Goldman and ACA had independently approved the selection of 90 mortgage-backed securities to be included in the CDO after several discussions, including one with Paulson, as is typical in this type of transaction.
"CDO" is a common term for collateralized debt obligation, an investment-grade security backed by a pool of bonds, loans and other assets.
The job is even tougher because the documents governing a CDO are vague and contradictory about when the different tranche holders get paid--and how much--if it defaults.
In that case the SEC alleged that Goldman misstated and omitted key facts regarding a synthetic collateralized debt obligation (CDO) it marketed which hinged on the performance of subprime residential mortgage-backed securities.
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Financial Engineering: Only a few very smart and ill-directed mathematicians can explain what underpins a Collateralized Debt Obligation (CDO).
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When Pricewaterhouse Coopers LLC appointed its first CDO nine years ago, the executive worked under the umbrella of the human-resources department.
While acknowledging that a CDO's results can be difficult to quantify, Ms. Moats, who is Mexican-American, credits her predecessors with the recent increase in female leaders at the firm.
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