A Prospectus Is Meant To Be Read

One cause that some have given for the recent financial problems is that the underwriters and sellers of the securities misled investors. With the discussion of various financial regulations, and passage of others, the government agrees. While we have no stance on whether investors were misled in verbal communications, it appears that these claims may be overstated. For example, in the famous Abacus CDO prospectus, Goldman Sachs stated they "..shall not have a fiduciary relationship with any investor," and that the firm "may have conflicts of interest." Even more directly in another deal, Citigroup and Credit Suisse stated that the firms may have conflicts, but also that the firms’ “actions may be inconsistent with or adverse to the interests of the Noteholders.” As an investor, you must remember that just because the SEC approves a prospectus does not mean that the SEC feels the investment is a good idea, but rather that all relevant information is disclosed. It is up to the individual to research the investment and decide for themselves.