A group of Australian councils, charities and churches has won a court case against the defunct US investment bank Lehman Brothers in a case that could have global ramifications.
The judgment is the first in the world to look at the conduct of an investment bank on both legal and ethical grounds in the lead-up to the global financial crisis and how they behaved in the aftermath, the ABC reports.
The class action involved 72 councils, churches and charities who sued Lehman Brothers for some $A250 million claiming it breached contracts and engaged in misleading and negligent conduct.
They had sought compensation for losses incurred on investments they made on advice from Grange Securities, bought by Lehman Brothers Australia in 2007.
A judge has ruled the parties are entitled to compensation but the amount has yet to be finalised.
The investments had exposure to the housing market collapse in the United States.
Members of the group were advised by Lehman's Australian arm before buying subprime mortgage-related derivatives or collateralised debt obligations (CDOs), called federation notes in Australia.
This was before 2007 when America's housing sector began to crash, sparking a meltdown on Wall Street.