UK: Fabulous Mumbo Jumbo

For some time now I have struggled to give an abbreviated version of what I do. When "I'm a lawyer" elicits the question, "What sort of law do you practice?" I find that there is no short, layman's-terms explanation of structured finance that doesn't put people to sleep. Recently I have resorted to saying, "I do the sort of stuff that caused the credit crunch," but some people, on hearing that, start backing away in horror as though I myself am as toxic as the assets in some of the transactions. At that point, I usually mumble something about trying to be funny and move on to another subject.

All that changed last month. As Fabrice Tourre went on trial for selling risky investments in complex financial products, the judge urged the banning of certain terms from the courtroom, including "CDO," "asset-backed," "securitisation," "short and long investors," and "credit default swap." "Have a heart," she urged, "Keep the mumbo-jumbo to a minimum."

So now I have a new, succinct description of what I do: "mumbo-jumbo."

To try to make sense of the mumbo-jumbo, I think in terms of an analogy:

Assume you are given some ingredients such as sugar, flour and butter, and asked to use them as the basis to make a finished product of your choice. It may turn out to be a cake, a pie, cookies, or perhaps something more exotic. Even though your dessert may be different each time – using a little more of this and a little less of that – the end result is nonetheless a unified, customized creation composed of those basic ingredients.

If those ingredients are financial – loans, assets, insurance – and you package them into a cohesive structure that can then be sold as a unit or indeed in slices, your "cake" is now a structured finance product.

If you add dodgy ingredients to your cake mixture the final product may be inedible, but it is still a cake. Similarly, a structured finance transaction or product can become tainted by the inclusion of toxic assets, for example, but the structure – e.g., the "cake" – is not itself a flawed structure. These complex financial products have helped fuel ten years of growth for banks and markets all over the world, but the misunderstood nature of what they are caused them to be blamed when some of the individual elements failed.

My area of the law deals with creating the structures; my clients identify the components we put into them. Then they are sold to investors with full disclosure about the degree of risk involved. If I use baking powder that is past its sell-by date, there is a risk that my cake won't rise. Investors may be willing to take that risk if the price is right; if not, they can simply pass on the purchase.

Which brings us back to the self-styled "Fabulous Fab."

A former mid-level investment banker with Goldman Sachs, 34-year-old Mr Tourre has been depicted as the archetype of everything that is wrong in the financial world. Driven by hubris and blinded by greed, bankers like Tourre seemingly play king-of-the-mountain with other people's money: the winner is the one who is left when all the others have lost their investments. This sort of competition has been depicted in films and documentaries about the credit crunch, and more recently, revealed in emails that Tourre sent to his girlfriend, in which he bragged about selling exotic financial products that he didn't understand. The synthetic collateralised debt obligations (that's one of the mumbo-jumbo words) that lost investors $1B in 2008 were simply structures for the trading of very risky investments, but shortly after the crash, those very structures were restricted, as though the CDOs were to blame.

In all the books and films about the credit crunch, the people who are shown to be responsible for the financial crisis are predominantly male. Remember Nick Leeson, the young banker whose risky trading caused the collapse of Barings Bank in 1995? His story, and that of others in his position, is one of irrational exuberance and overreaching ambition, energized and invigorated by an apparent addiction to risk.

Recent studies have shown a distinct correlation between testosterone levels and risk. In one study of Wall Street traders, the testosterone level in the morning would predict how much money they would make that day: high testosterone=high earnings. Furthermore, their success – or at least their own perception of it – would generate more testosterone, creating the "winner effect," whereby greater hormone levels would encourage more risk, more success, and more testosterone. Since women have only about 10% of the testosterone level of men, their approach to the market is more cautious. They are not unwilling to take risks, but they like to have sufficient information to adequately evaluate them before they do. As a result, their success on the trading floor actually exceeds that of men, but you don't hear about them because they aren't bringing down major banks or being prosecuted for losing investors' money. It is unlikely that a woman would be caught sending emails bragging about selling complex instruments she didn't understand.

Important in the studies is that men's behaviour is fuelled by their own perceptions of their success, not by actual verification of such. In this area, women fall short, as recent books such as Sheryl Sandberg's Lean In will attest. Too many of us lack confidence in our own abilities; thus we are all too willing to step aside and let a man push his way ahead of us in the working world. Then his own hormone level will tell him how good he is and he will continue to bully his way around his female counterparts on the corporate ladder. This is not a conscious action on his part – it's just the testosterone talking – but a conscious reaction on the part of women is needed to ensure that we don't hide our merits under a bushel of insecurities and timidity.

For me, I will confidently tell strangers and new acquaintances that I deal in financial mumbo-jumbo. No apologies. I'm good at it.

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.