This afternoon the Federal Court handed down its decision in a class action brought by three Councils (as the representative applicants) against Lehman Brothers (formerly Grange Securities Limited).
The claims concerned investment advice and decisions of Grange concerning synthetic collateralised debt obligations and other complex financial products (“SCDOs”). At the time of their acquisition by or on behalf of the Councils, the relevant SCDOs had credit ratings between AAA and AA-.
Rares J has held that, in marketing the SCDOs and in providing financial advice to the Councils, Grange:
Rares J also held a defence of “contributory negligence” was not available because:
As a result of the above, Rares J has held that Grange is liable to compensate the Councils for their losses incurred as a result of their investments, assessed on the basis that the Councils are entitled to:
A copy of the full decision may be found here and a copy of a summary released by the Federal Court may be found here.