{"id":5340,"date":"2012-09-25T00:00:00","date_gmt":"2012-09-25T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2012\/09\/lehman_brothers_australia_foun"},"modified":"2022-04-28T15:37:11","modified_gmt":"2022-04-28T20:37:11","slug":"lehman-brothers-australia-foun","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/lehman-brothers-australia-foun\/","title":{"rendered":"Lehman Brothers Australia Found Liable in CDO Losses of 72 Councils, Charities, and Churches"},"content":{"rendered":"<p>Lehman Brothers subsidiary Lehman Brothers Australia has been found liable for <a href=\"https:\/\/www.investorlawyers.com\/derivative-securities-derivatives-mortgage-backed-securities-mbs.html\">collateralized debt obligation<\/a> losses sustained by 72 councils, churches, and charities during the global economic crisis. The class action securities lawsuit was led by three Australian counsels\u2014Wingecarribee, Parkes and Swan City. A fixed settlement amount, however, has not yet been reached. The parties will have to meet to figure out the damages, and their submissions will then be presented to the Federal Court later this year. (Because the defendant, previously known as Grange Securities, is in liquidation, it cannot make any payments right now). The three lead plaintiffs had sought up to $209M (US dollars), which is how much they say was lost from the CDOs.<\/p>\n<p>The majority of the CDOs that caused the investors losses had been purchased from Grange Securities before Lehman Brothers Australia acquired the firm in 2007, which is the year when the bond world started to fall apart as the global economic crisis began to unfold. The plaintiffs are claiming alleged breach of fiduciary duty, misconduct, and negligence for how the defendant marketed the synthetic derivative investments.<\/p>\n<p>Federal Court Justice Steven Rares, who issued the ruling, said the CDOs were presented as if they were liquid like cash and safe investments even though they were, in fact, a risky, \u201csophisticated bet.\u201d He said the plaintiffs were told that they would get their money back if they held on to the CDO\u2019s until maturity and that high credit ratings placed the securities in the same arena as the AAA-rated Australian government\u2019s debts. They also presented the investments that it recommended or made for the plaintiffs as suitable for investors that had conservative goals.<\/p>\n<p>The judge noted that although that each of the three councils that were the lead plaintiffs had different complaints, in relation to two councils, the defendant was negligent in the advice and recommendation it offered them. Also, as financial advisor to two of the councils, the financial firm breached its fiduciary duty and took part in deceptive and misleading behavior when it pushed the CDOs as suitable for them.<\/p>\n<p><strong>More Blog Posts:<\/strong><br \/>\n<a href=\"https:\/\/www.investorlawyers.com\/blog\/2012\/08\/stockbroker_securities_roundup\">Stockbroker Securities Roundup: Criminal Convictions Vacated Against Six Charged in Front Running Scam and Citigroup Broker Cleared in $1B CDO Deal SEC Case<\/a>, Stockbroker Fraud Blog, August 11, 2012<\/p>\n<p><a href=\"https:\/\/www.investorlawyers.com\/blog\/some-sec-charges-against-inves\/\">Some of the SEC Charges Against Investment Adviser Over Alleged Involvement In J.P. Morgan Securities LLC Collateralized Debt Obligation Are Dismissed<\/a>, Institutional Investor Securities Blog, September 24, 2011<\/p>\n<p><a href=\"https:\/\/www.investorlawyers.com\/blog\/2008\/09\/lehman_brothers_structured_pro\">Lehman Brothers\u2019 \u201cStructured Products\u201d Investigated by Stockbroker Fraud Law Firm Shepherd Smith Edwards &amp; Kantas LTD LLP<\/a>n, Stockbroker Fraud Blog, September 30, 2008<\/p>\n<p> <a href=\"https:\/\/www.investorlawyers.com\/blog\/lehman-brothers-australia-foun\/#more-5340\" class=\"more-link\">Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Lehman Brothers subsidiary Lehman Brothers Australia has been found liable for collateralized debt obligation losses sustained by 72 councils, churches, and charities during the global economic crisis. The class action securities lawsuit was led by three Australian counsels\u2014Wingecarribee, Parkes and Swan City. A fixed settlement amount, however, has not yet been reached. The parties will [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3804,3862,3752,3824],"tags":[],"class_list":["post-5340","post","type-post","status-publish","format-standard","hentry","category-class-action-lawsuits","category-collateralized-mortgage-obligations","category-financial-firms","category-lehman-brothers"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Lehman Brothers Australia Found Liable in CDO Losses of 72 Councils, Charities, and Churches &#8212; Investor Lawyers Blog &#8212; September 25, 2012<\/title>\n<meta name=\"description\" content=\"Lehman Brothers subsidiary Lehman Brothers Australia has been found liable for collateralized debt obligation losses sustained by 72 councils, churches, &#8212; September 25, 2012\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.investorlawyers.com\/blog\/lehman-brothers-australia-foun\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Lehman Brothers Australia Found Liable in CDO Losses of 72 Councils, Charities, and Churches &#8212; Investor Lawyers Blog &#8212; September 25, 2012\" \/>\n<meta name=\"twitter:description\" content=\"Lehman Brothers subsidiary Lehman Brothers Australia has been found liable for collateralized debt obligation losses sustained by 72 councils, churches, &#8212; September 25, 2012\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Shepherd Smith Edwards &amp; Kantas, LLP\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Lehman Brothers Australia Found Liable in CDO Losses of 72 Councils, Charities, and Churches &#8212; 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