S&P, ANZ reach deal in class actions over toxic CDOs
Class Actions June 13, 2018 3:45 pm By Miklos Bolza | Sydney

S&P Global Ratings and ANZ Banking Group have agreed to settle seven class actions over toxic financial products given healthy credit ratings ahead of the global financial crisis.

On Wednesday, barrister for the class, Christopher Withers, told Federal Court Justice Michael Lee that the final settlement deed would be signed next Tuesday. The terms of the settlement are confidential, on request from S&P and ANZ.

The class actions, the first of which was launched in October 2014, alleged on behalf of a group of city councils and investors that S&P’s healthy ratings on collateralised debt obligations (CDOs) led to millions of dollars in losses.

ANZ was accused of breaching its duty of care as a financial service licence holder when it recommended the toxic CDOs.

The agreement, which includes more than $7 million in legal fees for class action firm Squire Patton Boggs, remains subject to court approval, and Judge Lee appeared impatient Wednesday to finalise the matter.

Echoing the urgency he expressed in the GetSwift proceedings last Friday, Judge Lee pushed the parties to get the final settlement agreement sorted as soon as possible, saying the court was not a “suburban golf club”.

“I made it clear that today is the day that I want to deal with the deed and the opt out notices,” he told the court. “And I’m going to do it.”

The judge also raised the prospect of appointing an independent referee to audit Squire Patton Boggs’ costs, a proposal firm partner Amanda Banton opposed.

“We’ve been through the referee process before and it wasn’t ideal. It wasn’t cost saving at all,” she told the judge.

Judge Lee is also considering appointing an independent settlement distribution company, he told the parties.

The judge set June 24 as the date for the  parties to file their final settlement approval application.

The deal comes after the trial in the class actions was adjourned, part-heard, on May 18.

It also follows a February settlement by S&P in a separate class action launched by Australian Unity’s Lifeplan and Big Sky over CDOs. While the final settlement figure was confidential, that deal included over $4.6 million in legal fees.

S&P and ANZ are represented by Clifford Chance.

The class actions are funded by Litigation Capital Partners.

The cases are MDA National Insurance Pty Ltd ABN 56 058 271 417 V McGraw-Hill Financial Inc (formerly McGraw-Hill Companies Inc) & AnorCoffs Harbour City Council ABN 79 126 214 487 v Australia and New Zealand Banking Group Ltd (trading as ANZ Investment Bank) ABN 11 005 357 522, Ceramic Fuel Cells Ltd ACN 055 736 671 v McGraw-Hill Financial, Inc (formerly McGraw-Hill Companies, Inc) (a company incorporated in New York) & OrsClurname Pty Ltd ABN 66 002 898 231 & Anor v McGraw-Hill Financial Inc (formerly McGraw-Hill Companies, Inc)(a company incorporated in New York) & AnorCoffs Harbour City Council ABN 79 126 214 487 v McGraw-Hill Financial, Inc (now known as S&P Global Inc.) & AnorLiverpool City Council ABN 84 181 182 471 v McGraw-Hill Financial, Inc (now known as S&P Global Inc.) & Anor, and Ceramic Fuel Cells Limited (in liquidation) ACN 055 736 671 v McGraw-Hill Financial, Inc. (formerly McGraw-Hill Companies, Inc) & Anor.

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Miklos Bolza

Miklos Bolza has been a journalist for three years. He has written for a variety of publications, including NZ Lawyer, HRD Australia, and Australian Broker. He is currently the Sydney court reporter for Lawyerly.