Toxic debt and compensation of investors - the case of credit rating agencies

Senior Lecturer, Dr Ann Wardrop, La Trobe University, Australia, tells us about how the Australian court has handled rating agencies who breached their duties to investors concerning the rating of financial products.

04.05.2015 | Andreas G. Jensby

Dato tor 28 maj
Tid 12:00 13:00
Sted Juridisk Institut, byg. 1414, lok. 247

Research Group on Law and Finance har den glæde at invitere til nedenstående finansielle foredrag ved Aarhus BSS, Aarhus Universitet:

Toxic debt and compensation of investors - the case of credit rating agencies
By senior Lecturer, Dr Ann Wardrop, La Trobe University, Australia

Australia has been at the forefront of awarding compensation to investors for the failures of rating agencies arising out of the financial crisis.  In a landmark case in 2014, the Australian federal court held a rating agency had breached a duty to investors concerning the rating of a financial product and ordered it to pay common law damages and compensation for breaching various statutory duties regarding misleading or deceptive conduct.

This was the first time in the world a court has awarded compensation to investors in a civil suit for rating agency negligence. This paper discusses the implications of this case in a comparative context, analysing it in light of the approach taken in the EU to regulation of credit rating agencies. The paper's focus is not only positive law but also discusses the theoretical rationale for imposing such liability. It approaches the latter question from a regulatory and normative perspective.

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Research Group Law and Finance