Required Reading Right Now: Magnetar, The Hedge Fund That Created Assets Designed To Fail

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Propublica just put out a huge report on the hedge fund Magnetar and its actions during the first years of the financial crisis.Propublica has been working on this investigation for seven months. There are emails, documents of 26 of Magnetar’s CDOs. The only comments Magnetar offered can be found in this press release.

We’ve only read the intro (there are eight chapters in all) but we have a feeling this is going to be big so we wanted to bring your attention to it right away.

“The hedge fund bought the riskiest portion of a kind of securities known as collateralized debt obligations — CDOs… It placed bets that portions of its own deals would fail.”

“…it did something to enhance the chances of that happening, according to several people with direct knowledge of the deals. They say Magnetar pressed to include riskier assets in their CDOs that would make the investments more vulnerable to failure.”

That’s a bold claim and Magnetar has denied they had any influence on the assets put into their CDOs.

Start reading Chapter 1 now –>

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