The risk that arises from portraying a counterparty to a derivatives transaction or a dealer as a “trusted adviser” who is legally bound to explain more or to recommend against what may turn out to be a losing game. This is often the case when one counterparty, upon experiencing painful losses, realizes in hindsight that it failed to understand what was proposed by the other counterparty or claims to have only received selective information from that counterparty or a dealer.

In this sense, participants in derivatives activities should neither be fooled by the mere size or apparent sophistication of their counterparties nor be acting on the assumption that such counterparties are frank in all information and details they present about the deal.