Rafts and rafts of dodgy. The very occasionally actually illegal, but almost exclusively an extremely careful parsing of 'what are we required by law to disclose?' There are a bunch of known cases of a buyer pushing specific groups of mortgages together into the same collateralized bond so that they could short against the bond, but that's legal so long as you tell everyone that you're doing it and so long as you don't disguise your own interest in the holdings.
There is at least one significant case where a firm directed Goldman to assemble a very specific set of securities together into a synthetic fund and then offer that bundle for sale without revealing that the firm had directed what mortgages were going to be bundled together, and those people are having some very uncomfortable conversations with the New York State financial crimes folks right now. But that sort of thing was.. unusually egregious.
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Date: 2011-02-22 05:24 am (UTC)There is at least one significant case where a firm directed Goldman to assemble a very specific set of securities together into a synthetic fund and then offer that bundle for sale without revealing that the firm had directed what mortgages were going to be bundled together, and those people are having some very uncomfortable conversations with the New York State financial crimes folks right now. But that sort of thing was.. unusually egregious.