4 ms·

What's the complicated financial product? It's just equity.

• lazide 6y ago
  Equity is one of the most complicated (and easiest to mislead buyers with) financial product out there? Are the books cooked? Who knows. What are the share classes, and how do they relate to each other? Who knows. What are the bylaws, and how is board composition determined? Who knows. All of these are huge. People get misled by far simpler products (like loans) all the time, let alone something like this.
  • ahepp 6y ago
    Usually when people talk about "complicated financial products" they mean some kind of derivative. Yes, you can cook the books. That doesn't make the product complex. It is fair to point out that some tech IPOs (We work comes to mind) had pretty sketchy corporate structuring and stock classes. But I don't think there's any simpler financial product than equity. You can do the same kind of financial engineering with bonds. Do you really know what's in the covenant? Is there even a covenant to speak of? People have been getting burnt for decades now by companies finding creative ways to separate the collateral from the loan.