Imagine you work as “in-house” counsel at an investment bank. Your principal role is to advise your clients (typically sales personnel, product structurers and traders) about the various legal, regulatory and compliance risks associated with esoteric financial products. These products are not well understood by people outside the financial services industry. They could be any number of financial instruments, such as indexed structured notes, mortgage-backed or other asset-backed securities, foreign exchange products or other financially engineered products.
In the following example let us assume that we are referring to a sophisticated over-the-counter (OTC) derivative products transaction.
