News Feed

October 25, 2016 - Vehicle overturns at Warrens Police say no injuries were reporte ... +++ October 25, 2016 - Digital direction Send and receive money digitally, e ... +++ October 25, 2016 - GG winding down school visits In a matter of weeks, once all goes ... +++ October 25, 2016 - Husbands, Walcott brilliant in Canada TORONTO, Canada – Veteran Bar ... +++ October 25, 2016 - Many positives on Windies A tour DAMBULLA, Sri Lanka – Head co ... +++ October 25, 2016 - Dismissal of iMart cashier raises eyebrows The Labour Department is said to be ... +++

Court rules against S&P

SYDNEY — Australia’s Federal Court has ruled that credit ratings agency Standard & Poor’s misled investors before the global financial crisis.

S&P gave its safest credit rating, AAA, to complex and risky securities, which later lost most of their value.

In what is regarded as a landmark ruling, the court ordered S&P and the bank which arranged the product, ABN Amro, to pay damages to investors.

S&P said it planned to appeal against the decision.

“We are disappointed with the Court’s decision, we reject any suggestion our opinions were inappropriate, and we will appeal the Australian ruling, which relates to a specific CPDO rating,” S&P, one of the world’s big three ratings agencies, said in a statement.

The ruling is the first of its kind on a rating agency’s liability for investors’ losses.

‘Misleading and deceptive’

Federal Court Justice Jayne Jagot said that S&P was “misleading and deceptive” in its rating of two structured debt issues in 2006, which she described as “grotesquely complicated”.

The case was brought against S&P and ABN Amro Bank by several Australian local governments which lost millions when the value of the investments was virtually wiped out during the financial crisis.

Judge Jagot said S&P and ABN Amro would have to pay 30m Australian dollars ($31m; 19m) in damages to the authorities.

IMF Australia, a company listed on the Australian Stock Exchange which funds legal claims, said the ruling was “likely to have global implications and be felt hardest in Europe and the US, where similar products were sold to banks and pension funds”.

The firm said this could pave the way for investors in Europe to recover significant losses from both S&P and ABN Amro, which is now owned by Royal Bank of Scotland. (BBC)

Leave a Reply

Your email address will not be published. Required fields are marked *