Financial Engineering: Only a few very smart and ill-directed mathematicians can explain what underpins a Collateralized Debt Obligation (CDO).

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"CDO" is a common term for collateralized debt obligation, an investment-grade security backed by a pool of bonds, loans and other assets.

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Goldman faces civil fraud charges by the Securities and Exchange Commission for how it packaged and marketed a complex collateralized debt obligation in 2007.

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The charge is in connection with the sale of a synthetic collateralized debt obligation that was tied to the performance of subprime residential mortgage-backed securities.

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In that case the SEC alleged that Goldman misstated and omitted key facts regarding a synthetic collateralized debt obligation (CDO) it marketed which hinged on the performance of subprime residential mortgage-backed securities.

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