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

Judge sides with Barclays, and rejects claims of fraud by Cassa di Risparmio della Repubblica di San Marino

Royal Courts of Justice

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

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