Hero of the Day, CPDO Edition
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Hero of the Day, CPDO Edition
By Felix Salmon
I’d never heard of Australian federal judge Jayne Jagot before today, but she’s my new favorite jurist, thanks to her decision in a recent court case which was brought against ABN Amro and Standard & Poors.
The coverage of the decision (Quartz, FT, WSJ, Bloomberg, Reuters) concentrates, as it should, on the hugely important precedent being set here: that a ratings agency — in this case, S&P — is being found liable for losses that an investor suffered after trusting that agency.
S&P is appealing the decision, which runs to an astonishing 635,500 words, or almost 1,500 pages: it’s literally longer than War and Peace. At this point, it’s fair to assume that Jagot is one of the world’s foremost experts on structuring and rating CPDOs — crazy derivative instruments which had a brief moment of glory at the end of 2006 before imploding spectacularly during the financial crisis. And helpfully, her decision begins with a 56-paragraph summary of her findings, which lays out exactly how culpable and incompetent S&P really was.
