I hope you’re hungry, because Bloomberg is serving up the next financial scandal. Last summer we learned about LIBOR manipulation, and how various panel banks had attempted to nudge the daily LIBOR fixing up or down with contributed rates that were “suggested” by their trader-friends, who would benefit from the resulting small directional movements. By all accounts, the rate scandal was a very big deal, shaking faith in over $300 trillion in linked financial instruments, spurring numerous investor lawsuits, and leading to The Wheatley Review, with its call for overhauling the structure, ownership, and oversight of this benchmark interest rate. If you thought it would be hard to imagine a bigger scandal, then apparently we all just lacked imagination. The LIBOR scandal is but a mere Hors d’oeuvre, compared to the enormously large feast that is the fixing scandal in…

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During this Thanksgiving holiday, we at Chatham got to thinking about the things for which we are thankful. Family, friends, health – the list contained the usual suspects. But this Thanksgiving, we had another reason to be thankful as we dug into the independent findings of Martin Wheatley, Managing Director of the Conduct Business Unit at the Financial Services Authority (FSA) and active Chief Executive of the newly created Financial Conduct Authority. In September, Mr. Wheatley released to the public “The Wheatley Review of LIBOR: Final Report,” a detailed, ten-step plan designed to give guidance for a policy response aimed at preventing future abuses of LIBOR and other financial benchmarks. After reading the Wheatley Review, we are thankful that the LIBOR calculation process is getting an apparently much-needed revamping. The Scandal In July, Chatham brought to your attention the economic…

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Reaching the Efficient Frontier of Risk Management March/April 2012, Corporate Finance Review

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