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Standard & Poor’s liable for ratings misrepresentations
Posted By David Jacobson On November 5, 2012 @ 1:32 pm In Corporations Act,Financial Services | Comments Disabled
In Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5)  FCA 1200  the Federal Court of Australia has allowed claims by 13 local councils which had lost over $16M when they purchased through Local Government Financial Services Pty Ltd a structured financial product known as a constant proportion debt obligation or CPDO from ABN Amro rated AAA by Standard & Poor's.
UPDATE 14 March 2013: The decision on damages, interest and costs
Judge Jagot decided that:
Judge Jagot rejected the arguments made by LGFS, S&P and ABN Amro of contributory negligence or the equivalent by the councils and ordered they were each proportionally liable to the councils as to 33⅓% each for the difference between the principal amount each council paid and the payment they received on the cash-out of the notes.
He also made orders as to the entitlements of S&P, ABN Amro and LGFS in cross-claims they made against each other and LGFS's claim for indemnity under the contract of insurance between FuturePlus and American Home Assurance Company.
Article printed from Australian Regulatory Compliance Review from Langes+ Lawyers: http://www.langes.com.au/australian_regulatory_compliance
URL to article: http://www.langes.com.au/australian_regulatory_compliance/2012/11/05/standard-poors-liable-for-ratings-misrepresentations/
URLs in this post:
  FCA 1200: http://www.austlii.edu.au/au/cases/cth/FCA/2012/1200.html
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