Does anyone understand the logic of this statement? I can't make heads of tails of it, which lowers my trust in the article overall. If people are arbitraging d

Does anyone understand the logic of this statement? I can't make heads of tails of it, which lowers my trust in the article overall. If people are arbitraging derivatives priced differently to underlying asset then that seems pretty benign to me? Is there something else going on here? One backdoor risk is exacerbated by a tactic of some all-too-clever hedge fund managers. They buy a little of the debt of risky companies at a discount, and then buy a much larger amount of insurance on that debt — so-called “credit default swaps” — to theoretically hedge their risk. These wiseguys then do everything they can to force the company into a bankruptcy filing, which contractually triggers the insurance payoff on the debt. Since the insurance payment exceeds by far the overall cost of the discounted debt, the hedge fund profits handsomely.