RT Journal Article
SR Electronic
T1 The Role of the Trustee in Mitigating Fraud in Structured Financings
JF The Journal of Structured Finance
FD Institutional Investor Journals
SP 73
OP 80
DO 10.3905/jsf.2005.470601
VO 10
IS 4
A1 Margery A. Colloff
YR 2005
UL https://pm-research.com/content/10/4/73.abstract
AB The author illuminates the behind-the-scenes administrative role of trustees in securitized transactions and describes their limited resources for ferreting out fraud. The article defines the elements of fraud, distinguishes fraud from negligence, describes the types of deals that are “hot spots” for fraud, questions whether fraud in structured finance transactions can ever be eliminated completely, and describes areas where a pattern of malfeasance emerges such as fraudulent custody of cash and cash flows, phantom collateral, and misleading servicer reports on available cash and collateral. The article proposes some inexpensive techniques and a joint effort by underwriters, issuers, servicers, trustees, and rating agencies to reduce opportunities for fraud in complex transactions.