5 Nov 2012

Claim for losses won by councils

12:56 pm on 5 November 2012

Thirteen councils in New South Wales have won a landmark case which will allow them to recoup losses suffered during the 2008 financial crisis.

The councils brought a class action against Standard Poors, ABN Amro and Local Government Financial Services.

The councils claimed they were misled into losing more than $A15 million in the financial crisis, saying Standard Poors led them to buy complex investments called Constant Proportion Debt Obligation Notes, which the agency had given a AAA rating.

The ABC reports that a ruling issued on Monday by Federal Court Justice Jayne Jagot found that rating was misleading and deceptive.

AAP reports the councils lost 93% of the capital they invested in the notes they bought from LGFS in 2006.

The councils succeeded in their claim for damages, with the three financial agencies to pay one third each of the amount lost by the councils, plus interest.