IMF Australia to fund council claims

Litigation funding firm IMF Australia has moved to fund claims on behalf of certain local councils against Local Government Financial Services, ABN Amro Bank NV and McGraw-Hill International (UK) Limited, the owner of Standard & Poor’s (S&P).

In its recent action, IMF informed the Australian Securities Exchange that it would fund claims relating to the purchase by the councils of Community Income Constant Proportion Debt Obligation Notes, also known as Rembrandt Notes. Litigation is already underway, with Corowa Shire Council and Parkes Shire Council individually making a claim and as representatives of 10 other local councils.

A claim has already been made against ABN Amro and S&P by law firm Piper Alderman, IMF Australia’s executive director, John Walker, has confirmed. Walker said the litigation funding firm is backing Piper Alderman’s claim against ABN Amro and S&P. He said the law firm’s claim stems from the fact that “ABN Amro were offering the notes at 180 basis points above the bank bill rates and talked S&P into giving it an AAA rating, knowing they would eventually be sold onto [Local Government Financial Services]".

“The fact is it should have never had an AAA rating and never should have been sold onto councils,” he said. The class action will also allege two other ratings agencies refused to rate the product.