SYDNEY Dec 5 Royal Bank of Scotland and
rating agency Standard & Poor's have been sued by a group of
European institutional investors for damages of up to $250
million suffered on complex financial products in the lead-up to
the global financial crisis.
The claim is the first group action of its kind to be
launched in Europe against an investment bank and rating agency
for their conducts prior to the crisis, litigation finance
company Bentham IMF Ltd said in a statement to the
Australian stock exchange on Thursday.
The group of 16 European institutional investors filed the
claim in Amsterdam on Wednesday for damages of up to $250
million suffered on investments in CPDOs - or constant
proportion debt obligations - that were rated AAA by S&P.
"This claim has no merit and we will oppose it vigorously,"
said S&P in a statement. "The ratings on these securities, which
date back to 2005-6, were assigned in good faith based on the
information available to us at the time."
The case also follows the landmark judgement issued by
Australia's Federal Court in November 2012, which found S&P had
deceived 12 local government councils that bought the CPDOs.
"Many of the facts, legal arguments and evidence
successfully established in the Australian claim will be
deployed in the Dutch action," Bentham IMF said.
The Australian judgment said a reasonably competent ratings
agency could not have rated the CPDOs at issue AAA, and that the
rating was misleading, deceptive and a negligent
misrepresentation to investors.
"Following the Australian Federal Court proceedings we have
a comprehensive dossier of information and evidence that we
believe is compelling to put before the Dutch judiciary," said
Gidget Brugman, the lawyer who is handing the case in the
S&P said it was appealing the Australian ruling and
meanwhile it had filed an action in London in May, challenging
the jurisdiction of the Netherlands.
"S&P has never had a presence in the Netherlands and its
CPDO ratings were assigned in the UK," it said.
Benthan IMF said it would oppose S&P's UK application.
RBS was not immediately available for comment.