The S.E.C. has sued the investment firm that advised the school districts to buy the three ill-fated securities, which the regulator said were unsuitably risky for unsophisticated investors. The five Wisconsin school districts lost tens of millions of dollars on a $200 million investment, most of which was borrowed.
According to NYT's Gretchen Morgenson:
"Once again, we see the same toxic ingredients that have appeared repeatedly in the aftermath of the crisis: collateralized debt obligations, credit default swaps, ruinous leverage, an overreliance on credit ratings, greed and extreme naïveté."