NYT is reporting that Credit Default Swaps Is Subject to a Joint Inquiry by Federal Prosecutors and New York State.

We have explained on this site aspects of CDS which really do not make them qualify as insurance (read previous post on the topic). The main focus on the federal and NYS prosecutors is on whether traders manipulated credit-default swap prices with the aim to drive down financial stocks.

The market of CDS has been largely unregulated, and there are current plans to make this market operates in an exchange which should make CDS prices transparent.


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