S&P, RBS Lose Appeal of Ruling Australian Towns Misled

Source: Bloomberg

Standard & Poor’s and a Royal Bank of Scotland Group Plc unit are liable for investment losses on securities bought by Australian towns, an appeal court judge ruled today, upholding a 2012 verdict they misled investors.

S&P’s rating of the securities was “unreasonable, unjustified and misleading,” Justice Peter Jacobson, who dismissed the appeal at the Federal Court of Australia in Sydney, wrote in a 473-page judgment.

The ruling is another setback for S&P, a unit of McGraw-Hill Cos., which faces more lawsuits in the U.S. and Europe over ratings it issued on residential mortgage-backed securities and collateralized debt obligations before their value plunged during the global financial crisis. The U.S. government has said it may seek as much as $5 billion.

“This is a landmark decision that changes the legal landscape,” Amanda Banton, a partner with Piper Alderman lawyers who represented the councils, said in a statement. “The implications for other claims currently in the court are enormous.”

Read more: http://www.bloomberg.com/news/2014-06-05/s-p-rbs-lose-appeal-on-ruling-they-misled-australian-investors.html