FSA hits out at CPDOs

The Financial Services Authority has questioned the use of constant proportion debt obligations (CPDOs), claiming they may misrepresent risk.

Speaking at the Standard & Poor’s Global Banking Conference in London, Thomas Huertas, director of wholesale firms at the FSA, cited the example of Gibson Greeting Cards and Bankers Trust when discussing CPDOs. In 1994 Gibson Greetings filed a lawsuit claiming that Bankers Trust, now part of Deutsche Bank, misrepresented the risks associated with the deriv

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