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===Might Section 3(d) ''not'' cover a representation?=== | ===Might Section 3(d) ''not'' cover a representation?=== | ||
Now you might ask what good an item of {{{{{1}}}|Specified Information}} can possibly be, if Section {{{{{1}}}|3(d)}} ''didn’t'' apply and it could be just made up on the spot without fear of retribution — as a youngster, the [[JC]] certainly asked that question, and has repeated it over many years, and is yet to hear a good answer — but all we can presume is that in its tireless quest to cater for the unguessable predilections of the [[Negotiator|negotiating community]], {{icds}} left this preposterous option open ''just in case''. It wouldn’t be the first time. | Now you might ask what good an item of {{{{{1}}}|Specified Information}} can possibly be, if Section {{{{{1}}}|3(d)}} ''didn’t'' apply and it could be just made up on the spot without fear of retribution — as a youngster, the [[JC]] certainly asked that question, and has repeated it over many years, and is yet to hear a good answer — but all we can presume is that in its tireless quest to cater for the unguessable predilections of the [[Negotiator|negotiating community]], {{icds}} left this preposterous option open ''just in case''. It wouldn’t be the first time. | ||
====Legal opinions, and Credit Support Documents==== | ====Legal opinions, and Credit Support Documents==== | ||
A trawl through the [[SEC]]’s “Edgar” archive<ref>[https://www.google.com/search?q=%22ISDA+Master+Agreement%22+site%3Ahttps%3A%2F%2Fwww.sec.gov You are welcome.]</ref> reveals that the sorts of things to which “[[Covered by Section 3(d) Representation]]” results in a | A trawl through the [[SEC]]’s “Edgar” archive<ref>[https://www.google.com/search?q=%22ISDA+Master+Agreement%22+site%3Ahttps%3A%2F%2Fwww.sec.gov You are welcome.]</ref> reveals that the sorts of things to which “[[Covered by Section 3(d) Representation]]” results in a “No” outcome are ''rare'' — but not non-existent. It is things like “[[Legal opinion]] from counsel concerning due authorization, enforceability and related matters, addressed to the other party and reasonably acceptable to such other party”, or “{{{{{1}}}|Credit Support Document}}s”. | ||
The predictable response is for the counterparty to say, “look: [[I’m not a lawyer]], okay, so it can hardly be on me if the legal advice I get [[in good faith]] happens to be wrong?” | |||
This may be expressed to you, [[Dissonance|dissonantly]], in the honeyed prose of a [[private practice lawyer]] — a vernacular foreign to most ISDA [[negotiator]]s. You may wonder whether it has not been disingenuously spoon-fed to your counterpart by just such a fellow. We will not speculate. But we will observe that, while it may seem compelling at first, it is ''bad'' logic. It presumes that what matters is the probity with which a counterparty conducts itself; that it acts in good faith and with a benign disposition; that its “good chapness” and the basic honesty it shows when dealing with its market counterparties is beyond impunity. | |||
But this is a commercial contract, friends. There are no ethicists in a foxhole. Moral judgments are beside the point. What matters is economic consequences of an untruth — the [[actus reus]], not one’s ''[[mens rea]]'' in uttering it. If I have engaged in a trading arrangement with you on the presumption that you are appropriately permissioned, licenced, and constitutionally able to enter into valid and binding swap contracts, and you satisfy that condition by proffering the legal opinion of some respectable attorney-about-town who says it is true, and that attorney turns out to be wrong, my commercial position is no less parlous just because you weren’t to know your legal advisor was a clot. I am now facing a counterparty whose obligations to me may not be enforceable, or may be suspended at any minute. I want out. I might wish you well and bitterly regret it were not otherwise, but it is not otherwise. I need out. If that causes you some embarrassment, inconvenience or financial loss, then the person to whom you should look ''is your lawyer''. | |||
Not for the first time, the “legal standard,” for no reason other than it is a legal question, and there is no-one else around qualified to gainsay it, is crafted to suit the personal interests of the opinining legal commumnity. Have no truck with this, fellows. | |||
====Annual reports==== | ====Annual reports==== | ||
The other little fiddle — and it ''is'' a little fidgety fiddle — is to remark of annual reports that, yes, they ''are'' covered by that Section 3(d) representation, ''but'' with a [[proviso]]: | The other little fiddle — and it ''is'' a little fidgety fiddle — is to remark of annual reports that, yes, they ''are'' covered by that Section 3(d) representation, ''but'' with a [[proviso]]: | ||