Deals
Wall Street Titans Cut Deal to Clean Up Shady CDS Trades
- Industry group announces new plan for what triggers payouts
- Proposal follows controversy over Blackstone’s Hovnanian trade
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Wall Street banks and hedge funds are closing in on a fix that they hope will clean up an $8 trillion portion of the derivatives market that’s gained a reputation for being one of the shadiest corners in finance.
At issue are a number of transactions in recent years in which powerful investment firms have been accused of earning big money from swaps trades by enticing companies to miss bond payments they could otherwise make. The practice has eroded market confidence, triggered legal fights and led to scrutiny from regulators.