Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

S&P loses landmark Australian court case on complex product ratings

S&P loses landmark Australian court case on complex product ratings

Ratings agencies across the globe could come under legal pressure after Standard & Poor’s lost a landmark Australian court case on the ‘misleading’ way it rated complex financial products just before the credit crunch.

S&P, along with ABN Amro, were sued by 12 New South Wales councils which claimed the misleading conduct cost them more than $16 million.  The councils had invested in constant proportion debt obligations (CPDOs), which lost around 90% of their value during the crisis.

The Federal Court ruled that S&P was ‘negligent’ and Justice Jayne Jagot said no competent ratings agency should have given the products such high ratings.

The implications of the 1459-page decision could be wide reaching and could draw in rival ratings agency Fitch and Moody’s. The UK, USA, New Zealand and Netherlands are expected to launch similar lawsuits against S&P.

According to reports S&P plans to appeal and dismissed ‘any suggestions our suggestions were inappropriate’.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Biotech Growth: we will ride out this storm

Biotech Growth: we will ride out this storm

Geoffrey Hsu of Biotech Growth Trust says the sell-off in biotechnology stocks represents a buying opportunity for long-term investors.

Play Picton: the UK property hotspots for rental income

Picton: the UK property hotspots for rental income

Picton Property Income CEO Michael Morris reveals how he is planning to ride the ‘ripple effect’ as UK economic growth spills out from the capital across the country.

Brewin's Foster talks financial crisis MkII with Allianz's Riddell

Brewin's Foster talks financial crisis MkII with Allianz's Riddell

This week Brewin Dolphin's head of research talks to Mike Riddell, fund manager at Allianz Global Investors, about the forces driving bonds markets in a tumultuous week for markets.

Your Business: Cover Star Club

Profile: 'what we are doing at Mosaic is Darwinian'

Profile: 'what we are doing at Mosaic is Darwinian'

The changes in financial services over the last few years may leave some destitute warns Marco Sambucci of Mosaic Money Management

Wealth Manager on Twitter