5 ms·

> slimy and dishonest Wouldn't this rise to the level of fraudulent and thus criminal?

• corey_moncure 7y ago
  It's only illegal if you get caught, and then only if the fine is greater than the booty you got swindling honest people out of their money.
  • jacquesm 7y ago
    You really should add that /s.
    • jjoonathan 7y ago
      Why?
• rjkennedy98 7y ago
  Tell me the difference between stupid and illegal and I'll have my wife's brother arrested. - Big Short
• sailfast 7y ago
  If you have all of the "invest at your own risk" language in the fine print, you provide complete information about the investment, and then the user does not read the prospectus because it's too long / esoteric I'm not sure it gets to that level. The fact that these ratings have been assumed to be a reliable proxy for risk in the market (to the point that people automate based on it) is likely the bigger issue here and the larger cause of the systemic risk of incorrect ratings.
• JackFr 7y ago
  Because to some extent the 'risk profile' is both aspirational and out of your hands. You can say 90% of your fund is investment grade, and S&P come in and downgrade a large holding of yours (or upgrade one).
  • MR4D 7y ago
    I work with fund managers on a frequent basis. They all have a requirement to sell when an investment crosses certain risk boundaries (such as ratings downgrades). Sure, some funds have a "go anywhere" IPS, but ratings downgrades often causes a flurry of asset sales. If you say your holdings are 90% IG, and then after a downgrade they are only 70% IG, then you have two options: #1 - sell the downgraded assets to bring it back into compliance, or; #2, if you are within your funds stated IPS, then you have to restate the number as 70%, and have to remove all literature that references the 90% number. IG = Investment Grade IPS = Investment Policy Statement