Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration 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 Boutique tapes: my business will never be sold

Boutique tapes: my business will never be sold

In the final part of our four part series we discuss consolidation and whether it's getting tougher for boutiques to survive.

Play Boutique tapes: are top managers better off at small firms?

Boutique tapes: are top managers better off at small firms?

In episode three of our series, boutique bosses discuss whether the best fund managers are more likely to thrive at smaller firms.

Play Boutique tapes: if you want a Ferrari, you have to pay for it

Boutique tapes: if you want a Ferrari, you have to pay for it

In the second part of our four-part series, boutique bosses are asked how they can justify the fees charged by active managers.

Read More
Your Business: Cover Star Club

Profile: how this boutique beat the big guns of wealth

Profile: how this boutique beat the big guns of wealth

This small west country offshoot of a local IFA scooped a 2018 Citywire award from beneath the noses of the national challengers

Wealth Manager on Twitter