Investors Scrutinizing the Regulators

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ABCP case coming out Monday

Jim Middlemiss

Friday, August 15, 2008

The Ontario Court of Appeal has announced that its long-awaited decision on the asset-backed commercial paper workout will be released after markets close on Monday, Aug.18, at 5 pm.

That's little more than a year since the $32-billion market froze up in light of the credit crunch and led to a massive restructuring effort by the Pan Canadian Investors Committee.

The appeal court will rule on whether or not Ontario Superior Court Justice Colin Campbell was right to OK a restructuring package, which would see retail investors be paid out, while corporate investors and pension funds take a hit in their investments in the commercial paper.

At issue is whether or not Justice Campbell was correct in ruling that the workout could proceed with broad releases that would bar investors from suing the banks and brokers that sold them the paper and the rating agency that gave it high grades.

In the U.S., investment banks were forced by regulators to take similar-type investments, known as auction-rate securities, back onto their books and reimburse investors for their losses and pay hundreds of millions of dollars in fines for the way the investments were sold.

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