AUSTRALIA: The credibility of the ratings agency Standard & Poor’s has
come under legal attack in a A$40 million action by a local
Australian government superannuation investor over a triple-A rated debt
investment that subsequently turned toxic in the global financial
crisis, the Sydney Morning Herald reports. S&P has been challenged to
defend the rating it subscribed to “constant proportion debt
obligation” notes called Rembrandt that were created by the investment
bank ABN Amro and bought by Local Government Financial Services, which
then sold it to district councils. LGFS has alleged that Standard &
Poor’s breached the Corporations Act by giving the Rembrandt notes the
status of a top-rated — and by implication a low risk and very secure
— bond.