Squire Patton Boggs lawyer says Fitch having a discovery ‘whinge’ in class action
Class Actions July 11, 2018 10:25 pm By Miklos Bolza | Sydney

Facing cross-examination over the law firm’s bid to add fraud and deceit claims to a class action against Fitch Ratings, a Squire Patton Boggs lawyer exchanged fire with a barrister for the ratings agency, saying Fitch was having a regular “whinge” about discovery and “no” she would not take the comment back.

During an interlocutory hearing in the Federal Court on Wednesday over the firm’s application to amend the pleadings in the representative action, SPB partner Amanda Banton stood her ground as Fitch barrister Jeremy Stoljar SC accused her of being unnecessarily “offensive”.

Fitch is trying to block the amendments, claiming they are “oppressive” and require a “very broad investigation” of 20 years’ worth of documents ahead of a scheduled October trial. The case alleges Fitch gave overly rosy ratings to financial products that tanked during the global financial crisis in 2007.

“I noted that they were having the standard defendant whinge about having to do discovery,” Banton told Justice Michael Wigney.

“[That’s] an offensive and unnecessary statement, isn’t it, Ms Banton? Do you wish to withdraw it?” Stoljar asked.

“No,” Banton replied.

The class action, which was filed in October 2014 and is funded by International Litigation Partners, accuses Fitch of giving false and misleading triple A and double A ratings to select synthetic collateralised debt obligations (SCDOs), allegedly resulting in massive investor losses.

The class also claims the ratings agency failed to disclose material facts about its ratings methodology, acted unconscionably, and breached its duty of care to investors and potential investors.

Squire Patton Boggs is fighting to add deceit and concealed fraud claims to its pleadings after discovering a hidden, password-locked table in version 3.1 of Fitch’s VECTOR exposure model. The model was in use in 2007 to determine how likely it was that a particular investment portfolio would default.

In his cross-examination, Stoljar questioned why Squire Patton Boggs had filed its proposed amended pleadings two weeks late, on June 8, the same day Fitch contacted Judge Wigney to ask for the trial to be pushed back.

“Do you seriously put to His Honour that it was near coincidence that you finished that process an hour or two after Fitch spoke to His Honour?” he asked.

“Absolutely,” Banton said.

The interlocutory hearing continues Thursday.

Instructed by SPB, barrister Christopher Withers represented the class action. Fitch is represented by Maddocks.

The case is Mid-Coast Council ABN 44 961 208 161 & Anor v Fitch Ratings, INC (A Company Incorporated in Delaware, USA) & Ors.

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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.