An Australian Federal Court Judge found S&P has misled and deceived investors when it awarded its highest credit rating to CPDOs whose value collapsed ahead of the financial crisis. S&P now faces the prospect of further legal action in Australian courts over the rating of risky structured products after a litigation specialist said it would back a class action lawsuit. In the US rating agencies have been able to stave off damage claims because ratings are considered opinions which are protected by the US constitution’s guarantee of free speech. Rating agencies do have precisely worded disclaimers to that effect.
Following the Australian verdict the stock of S&P’s parent company, McGraw-Hill Companies dropped by 4%.
Source: Financial Times