between S&P giving a AAA rating to a complex CDO at the peak of the housing bubble and an equity analyst at Goldman Sachs giving a $1000 price target to an internet stock with little sales, no profits and 20 employees, at the peak of the Nasdaq bubble? Whoever took their advice got slaughtered.
Now, the government is trying to say that what S&P did is illegal and what the equity analyst did was just normal business. Give me an #$%$ break!
Most investors in CDO's weren't individuals, they were banks, hedge funds, and pension funds who have the fiduciary duty to their investors to do proper due diligence before throwing billions of dollars in any investment. Many of the CDO's that contained RMBS(subprime or not) rated by the rating agencies had multiple risk factors relating to the housing market attached to them and were clearly spelled out to prospective buyers. The fact that these instruments were extremely illiquid and many times just getting a valid quote was impossible really compounded the problem.
The DOJ's logic is severely flawed and I'm anticipating this case being dismissed before it ever sees the light of day.