August 30, 2018 / 9:30 AM / a month ago

S&P, others paid $157 million to settle landmark Australian lawsuit

SYDNEY (Reuters) - Standard & Poor’s and other companies paid A$215 million ($157 million) to settle a lawsuit in Australia where they were accused of overlooking risks when awarding high ratings to opaque investments that imploded in the global financial crisis.

A view shows the Standard & Poor's building in New York's financial district February 5, 2013. REUTERS/Brendan McDermid/Files

Australia’s Federal Court published the figure on Thursday after approving its terms earlier in the month, in a decision ending the last crisis-era case against the firm.

S&P declined to comment on Thursday and referred Reuters to earlier remarks which said it was “pleased” to settle the case.

The U.S.-based ratings agency was sued by two local governments and two pension funds in Australia, which lost money on synthetic collateralised debt obligations (SCDOs) rated by S&P when the U.S. subprime mortgage crisis hit a decade ago.

During the case, lawyers for the local councils accused S&P of weakening its risk assessment criteria to win business and turn out high ratings on opaque debt products. S&P said it designed and assigned ratings in accordance with well-recognised international practice and Australian regulations.

“It is plain beyond peradventure that the gross settlement sum ... is an amount which is fair,” Federal Court Justice Michael Lee said in a written decision.

He added that it “amounts to significant vindication,” for the pension funds and local councils, though was critical of litigation funder Litigation Capital Partners receiving an “extraordinarily large” A$92 million portion of the settlement.

A spokesman for the Singapore-based funder declined to comment, citing confidentiality clauses.

Representatives of the funds and councils had no immediate comment when contacted by Reuters on Thursday, though one of them, Liverpool Council in Sydney had previously described the settlement as a “positive outcome”.

In 2015 S&P paid $1.5 billion to resolve a slew of similar lawsuits in the U.S.

($1 = 1.3731 Australian dollars)

Reporting by Tom Westbrook; Editing by Kim Coghill

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below