In the recent case of ABN AMRO Bank NV v Bathurst Regional Council [2014] FCAFC 65, the Federal Court of Australia confirmed the first instance finding in Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200 that, as a matter of Australian common law, a rating agency owes a duty of care to investors in a rated financial product. The principal basis on which the Federal Court reached this conclusion was that the rating agency knew that potential investors would rely on the agency’s opinion when making investment decisions.

By Thomas Werlen/Yasseen Gailani (Reference: CapLaw-2014-25)