So we are clear: The ratings agencies were complicit partners in building the pyramid of bad assets for one reason: profit and greed.

The judgement comes in a court of law in Australia. Per theFinancial Times:



Standard & Poor’s misled investors by awarding its highest rating to a complex derivative product that collapsed in value less than two years after it was created by ABN Amro, an Australian judge has ruled, in a landmark case that paves the way for legal action in Europe. In a damning verdict the Federal Court of Australia ruled S&P and ABN Amro, now owned by RBS, had “deceived” and “misled” 12 local councils that bought triple-A rated constant proportion debt obligations (CPDOs) from an intermediary in 2006 The court said a “reasonably competent” ratings agency could not have assigned the securities, which were described as “grotesquely complicated”, a triple A rating. S&P and ABN Amro also published information and statements that were either “false” or involved “negligent misrepresentations”, Justice Jayne Jagot found. The 1,500-page ruling marks the first time a ratings agency has stood a full trial over a structured finance product. The decision will be closely studied by rival ratings agencies and also by investors and investment banks around the world.[emphasis added]

IMF Australia, a publicly listed company that funds large class-action lawsuits and financed the claim, said it is planning legal action in Amsterdam related to some 2 billion euros in CPDOs sold by ABN Amro and rated by S&P.

And in the Sydney Morning Herald it is clear this is just the first salvo against the corruption at S&P:Now, the question is what will the Justice Department do? More than a year ago, as I wrote , the Justice Department was investigating "whether the nation’s largest credit ratings agency, Standard & Poor’s, improperly rated dozens of mortgage securities".

Truthfully, I have been arguing for a very long timethat convicting the company without jailing the executives is not good enough. Financial penalties are, ultimately, paid for by the shareholders and consumers (in the case of banks)--while the executives continue to reap huge pay and benefits.

But, today, I'll take this conviction of a corporate law breaker.