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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’.

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Profile: The opportunity set that attracted Brett Williams to wealth management

Profile: The opportunity set that attracted Brett Williams to wealth management

Brett Williams is best known for helping to build some of the biggest platforms in the IFA market.He made the move over to wealth management to head SEI’s UK business earlier this year in the belief that this is where the best opportunities now lie.

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