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CDO ratings arbitrage “reasonable and justifiable”, UK court finds

CDO ratings arbitrage ‘reasonable and justifiable’, finds UK court

Royal Courts of Justice
  • Ramya Jaidev
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A London court has deemed it fair for banks to engage in credit ratings arbitrage in the sale of complex structured credit products, setting a vital precedent for collateralised debt obligation (CDO) mis-selling cases. The judgement in a dispute between San Marino bank Cassa di Risparmio della Repubblica di San Marino (CRSM) and Barclays also sounds a warning to investors over how much responsibility they must take in risk assessment.

In the March 9 ruling handed down in the commercial court, Ni

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