6 Nov 2012

Appeal to be made against council ruling

8:32 am on 6 November 2012

Standard Poor's is to appeal against a ruling which will allow 13 councils in New South Wales to recoup losses incurred during the 2008 financial crisis.

The councils brought a class action against SP, ABN AMRO and Local Government Financial Services.

The councils claimed they were misled into losing almost $A16 million in the financial crisis, saying SP led them to buy complex investments called constant proportion debt obligation notes, which the agency had given a AAA rating.

The ruling by the Federal Court on Monday found that rating was misleading and deceptive.

The three agencies were ordered to pay a third of the amount lost by the councils, plus interest. The ABC reports the councils will recoup about $A30 million.

But in a statement, SP said it intends to appeal:

"We reject any suggestion our opinions were inappropriate, and we will appeal the Australian ruling, which relates to a specific CPDO rating," the statement read.

The ABC reports the ruling followed another in September against Lehman Brothers, which was found to have breached legal duties when it sold toxic derivatives to a group of charities, councils and church groups who collectively lost about $A250 million.