Cahill hires libel lawyers after quitting BarCap

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The Independent Online

The investment banker who quit Barclays Capital last week has hired a top libel lawyer to defend his reputation.

Edward Cahill has instructed James Libson, the head of dispute resolution at Mischon de Reya, to quash any comments implying there was anything untoward about Mr Cahill's departure from Barclays. Mr Cahill may bring libel actions against those who make these suggestions.

Mr Libson said Mr Cahill is employed by Barclays Capital and is working with the bank on any issues that need to be cleared up, "which aren't many". Mr Libson's work for Mr Cahill is not related to employment issues with Barclays, he said.

Mr Cahill quit as head of European collateralised debt obligations on 20 August, his first day back from holiday. Two days later, Standard & Poor's, the credit rating agency, cut its ratings on two investment funds Mr Cahill's team had helped set up.

Mr Cahill specialised in setting up CDOs, which are pools of assets that package up debt with varying degrees of risk, and structured investment vehicles (SIVs), which sell cheap debt to fund racy, high-yielding investments.

Both have been at the centre of investor alarm in the current credit crunch after the market was spooked by massive defaults on mortgages lent to poor people in the US. Securities based on the sub-prime US mortgages have featured heavily in both CDOs and SIVs.

Mr Cahill's team spearheaded innovation in the market for these products, creating the SIV-lite, a legally simpler version of the SIV with a greater concentration of asset class.

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