Abstract
In 2007, credit rating agencies (CRAs) had provided triple-A ratings to many securitised bond issues financed by subprime mortgages, and as a result investors had suffered losses when some of the bond issues failed. This chapter analyses various diverse issues relating to the case law regulation of CRAs in the US. They range from legal action investors can take against CRAs based on tort law and the potential drawback to corrective and distributive justice, the third-party beneficiary rule, liability for false statement in public registration, legal protection afforded to CRAs (including First Amendment protection) and claims lodged by issuers against CRAs. It examines the deterrent effect that the law has on CRAs and their responsibility to investors as gatekeepers. This chapter will only examine the US position as this is where the subprime mortgage crisis has emerged and because it is based on common law. The position in the EU is that most of the countries have adopted a civil law system that is not compatible.
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- 1.
- 2.
Harlow (2005), p. 28.
- 3.
Ibid.
- 4.
- 5.
See Lippke (1999), pp. 149–169.
- 6.
See Coleman (1995), p. 56.
- 7.
Ibid., p. 58.
- 8.
Ibid., p. 57.
- 9.
See Caparo Industries plc v Dickman [1990] 1 All ER 568; Credit Alliance v Arthur Anderson and Co 483 Need 110 (1985); Billy v Arthur Young & Co 834 P 2d 745 (1992); Esanda Finance Corp Ltd v Peat Marwick Hungerfords (reg) (1997) 142 ALR 750; Nguyen and Rajapakse (2008).
- 10.
See R. Lord, Williston on Contracts, 4th Edition, Lawyers Cooperative Publishing (2012) § 69:2.
- 11.
Restatement (Second) of Torts, American Law Institute (1977–2009), § 526.
- 12.
See Glossary for the meaning of “scienter”.
- 13.
Ernst and Ernst v. Hochfelder, 425 U.S. 185, 96 S. Ct. 1375, 47 L. Ed. 2d 668 (1976).
- 14.
Under Rule 9(b), Fed. R. Civ. P.
- 15.
In order to comply with Rule 9(b), of the Federal Rules of Civil Procedure 2010 (as amended), See Walburn v. Lockheed Martin Corp., 431 F.3d 966, 972 (6th Cir.2005) (quoting Coffey v. Foamex L.P., 2 F.3d 157, 161–162 (6th Cir. 1993).
- 16.
See Fed.R.Civ.P. 9(b); S.E.C. v. Blackwell, 291 F.Supp.2d 673, 696 (S.D.Ohio 2003).
- 17.
Ernst and Ernst v. Hochfelder, 425 U.S. 185, 96 S. Ct. 1375, 47 L. Ed. 2d 668 (1976).
- 18.
In Re National Century Financial Enterprises, Inc., 541 F. Supp. 2d 986—Dist. 2007).
- 19.
The US CA, 437 F.3d 588, 602 (2006).
- 20.
Tellabs, Inc. v. Makor Issues & Rights, Ltd., 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007).
- 21.
127 S.Ct. at 2509.
- 22.
Ibid.
- 23.
- 24.
Abu Dhabi Commercial Bank v. Morgan Stanley & Co. Inc. and Kings County, Washington v. IKB Deutsche Industrie Bank AG.
- 25.
Abu Dhabi Commercial Bank et al v. Morgan Stanley & Co et al, U.S. District Court, Southern District of New York, No. 08-07508.
- 26.
King County, Washington et al v. IKB Deutsche Industrie bank AG et al, U.S. District Court, Southern District of New York, No. 09-08387.
- 27.
Abu Dhabi at 1.
- 28.
Ibid. at 175.
- 29.
Ibid.
- 30.
Ibid. at 176.
- 31.
Ibid. at 165.
- 32.
Ibid. at 181.
- 33.
Abu Dhabi, District Court of N.Y. http://docs.justia.com/cases/federal/district-courts/new-york/nysdce/1:2008cv07508/331416/602/0.pdf?1363876053.
- 34.
Foley (2013).
- 35.
Wall Street (2013).
- 36.
In re Nat’l Century Fin. Enters. Inc. Inv. Litig., 580 F.Supp.2d 630, 639–640 (S.D. Ohio 2008) and Cal. Public Employees Ret. System, No. CGC-09-490241, slip op. at 10 (Cal. Super. Ct. S.F. Cty. 1 June 2010).
- 37.
See Glossary under the term “misrepresentation”.
- 38.
Ibid.
- 39.
Ibid.
- 40.
Board of Education v. A, C and S, Inc., 131 Ill.2d 428, 137 Ill.Dec. 635, 546 N.E.2d 580 at 593.
- 41.
In Perschall v. Raney, 137 Ill. App.3d 978, 92 Ill.Dec. 431, 484 N.E.2d 1286, 336*336 1290 (1985).
- 42.
Kuch & Watson, Inc. v. Woodman, 29 Ill.App.3d 638, 331 N.E.2d 350, 354 (1975).
- 43.
de Savornin Lohman and van’t Westeinde (2007).
- 44.
Bathurst Regional Council v Local Government Services Pty Ltd (No. 5) [2012] FCA 1200.
- 45.
Allen & Overy, “Rating agencies on the firing line” (11 January 2013). http://www.allenovery.com/publications/en-gb/Pages/Rating-agencies-in-the-firing-line.aspx.
- 46.
See B. Bintiff, “Mandatory verses Persuasive case” (2001). http://faculty.law.lsu.edu/toddbruno/mandatory_v__persuasive.htm.
- 47.
Powers (1993).
- 48.
Prince (1984).
- 49.
Feinman (2000), p. 44.
- 50.
XL Disposal Corp. v. John Sexton Contractors Co., 168 Ill.2d 355, 213 Ill.Dec. 665, 659 N.E.2d 1312, 1316 (Ill.1995).
- 51.
Harbor Drive Condominium Ass’n v. Harbor Point, Inc., 209 Ill.App.3d 631, 154 Ill.Dec. 365, 568 N.E.2d 365, 375 (1991).
- 52.
Ibid.
- 53.
See “What is Medicaid?” http://dhss.alaska.gov/dhcs/Pages/medicaid_medicare/default.aspx.
- 54.
- 55.
Maurice L. Quinn, Plaintiff-Appellant v. The McGraw-Hill Companies, Inc., Defendant-Appellate, No. 97-3269, United States Court Of Appeals, Seventh Circuit, 168 F.3d 331 (1999).
- 56.
Ibid.
- 57.
Ibid. at 334.
- 58.
Ibid. at 335.
- 59.
Under Fed.R.Civ.P. 12(b) (6).
- 60.
See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); Roth Steel Prods. v. Sharon Steel Corp., 705 F.2d 134, 155 (6th Cir.1982).
- 61.
Conley v. Gibson, 355 U.S. 41, 45–46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).
- 62.
Morgan v. Church’s Fried Chicken, 829 F.2d 10, 12 (6th Cir.1987).
- 63.
See Bell Atlantic, 127 S.Ct. at 1964–1965, 167 L.Ed.2d 929; Associated Gen, Contractors of Cal, Inc. v. Carpenters, 459 U.S. 519, 526, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983).
- 64.
Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986); accord Morgan, 829 F.2d at 12.
- 65.
Civil Procedure Rules (CPR) governs pleadings in England and Wales. The CPR rules and directions incorporating 67th update that came into force on 13 November 2013. http://www.justice.gov.uk/courts/procedure-rules/civil/rules.
- 66.
Federal Rules of Civil Procedure (as amended to December 1, 2013) govern pleading in United States federal courts. http://www.law.cornell.edu/rules/frcp.
- 67.
Federal Rules of Civil Procedure, Title III, Pleading and Motions, Rule 15 Amended and Supplemented.
- 68.
“Rule 15. Amended and Supplemental Pleadings” http://www.law.cornell.edu/rules/frcp/rule_15.
- 69.
Ronzani v. Sanofi S.A., 899 F.2d 195, 198 (2d Cir.1990).
- 70.
Federal Rules of Civil Procedure, Luce v. Edelstein, 802 F.2d 49, 56 (2d Cir.1986).
- 71.
For pleading requirements for fraud under Fed.R.Civ.P. 9(b), see LaSalle Nat. Bank v. Duff & Phelps Credit Rating Co., 951 F. Supp. 1071 – Dist. Court, SD New York (1996), pp. 1081–1082.
- 72.
Jefferson City School District No. R-1 v. Moody’s Investor’s Services 175 F. 3d 848—Court of Appeals 10th Circuit 1999.
- 73.
In re Lehman Bros. Mortgage-Backed Securities 650 F. 3d 167 at 188—Court of Appeals (2nd Circuit 2011).
- 74.
In re Moody’s Corp. Securities Litigation, 599 F. Supp. 2d 493—Dist. Court, SD New York 2009.
- 75.
Abu Dhabi (2009).
- 76.
In re Moody’s Corp (2009) at 518.
- 77.
Abu Dhabi (2009) at 163–164 and 187–8.
- 78.
In King County, Wash. v. IKB Deutsche Industriebank AG 708 F. Supp. 2d 334—Dist. Court, SD New York 2010.
- 79.
Allen v. United Financial Mortgage Corporation (2009) at 1099.
- 80.
Compuware Corp. v. Moody’s Investors Servs., Inc, 499 F. 3d 520—Court of Appeals, 6th Circuit 2007 at 534.
- 81.
In Re Merrill Lynch & Co., Inc. Research Reports 272 F. Supp. 2d 243—Dist. Court, SD New York 2003; 272 F.Supp.2d 243 (2003).
- 82.
See McCormick v. Kopmann, 23 Ill. app. 2d 189, 161 N.E.2d 720 (1959).
- 83.
“An Act to reform Federal securities litigation, and for other purposes”. 22 December 1995—H. R. 1058, http://www.gpo.gov/fdsys/pkg/PLAW-104publ67/html/PLAW-104publ67.htm; See also In Re Merrill Lynch & Co, (2003) at 267.
- 84.
For the definition of “hindsight”, see Glossary.
- 85.
Roake and Davidson (1996).
- 86.
- 87.
Section 933.
- 88.
Jickling (2010), p. 6.
- 89.
Ibid, Column 1, Para 5 at 2.
- 90.
Sack and Wilderman (2010), p. 243.
- 91.
Dodd-Frank Wall Street Reform And Consumer Protection Act, http://thomas.loc.gov/cgi-bin/cpquery/?&sid=cp111SXv12&r_n=hr517.111&dbname=cp111&&sel=TOC_1713897&.
- 92.
By amending Sections 15E (m) and 21D (b) (2) of the Securities Exchange Act of 1934. (15 U.S.C. 78o-7(m).
- 93.
By amending Section 15E (m), Ibid.
- 94.
By amending Section 21D (b) (2), Ibid.
- 95.
Exception in ibid.
- 96.
Goel and Thakor (2011).
- 97.
Froeba (2009).
- 98.
U.S. Const. amend. I. “The First Amendment of the United States Constitution protects the right to freedom of religion and freedom of expression from government interference. Freedom of expression consists of the rights to freedom of speech, press, assembly … and the implied rights of association and belief. The Supreme Court interprets the extent of the protection afforded to these rights”.
“The most basic component of freedom of expression is the right of freedom of speech. The right to freedom of speech allows individuals to express themselves without interference or constraint by the government. The Supreme Court requires the government to provide substantial justification for the interference with the right of free speech where it attempts to regulate the content of the speech”.
“…[T]he right to freedom of the press guaranteed by the first amendment is not very different from the right to freedom of speech. It allows an individual to express themselves through publication and dissemination. It is part of the constitutional protection of freedom of expression. It does not afford members of the media any special rights or privileges not afforded to citizens in general”. Legal Information Institute, Cornell University Law School, http://www.law.cornell.edu/wex/first_amendment.
- 99.
In Re National Century Financial Enterprises, Inc., Investment Litigation, 580 F.Supp.2d 630 (2008).
- 100.
See the U.S. Const. amend.1. See also http://www.law.cornell.edu/wex/first_amendment.
- 101.
See Milkovich v. Lorain Journal Co., 497 U.S. 1, 11–14, 110 S. Ct. 2695, 111 L.Ed.2d 1 (1990) (summarising the history of defamation law).
- 102.
New York Times v. Sullivan, 376 U.S., 254, 269, 84 S. Ct. 710, 11 L.Ed.2d 686 (1964).
- 103.
Ibid.
- 104.
Milkovich, 497 U.S. at 14, 110 S. Ct. 2695.
- 105.
See Milkovich (discussing Sullivan and Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S. Ct. 1975, 18 L.Ed.2d 1094 (1967).
- 106.
Such as In re Pan Am Corp., where the court held that publisher of credit worthiness ratings of corporate and governmental debt instruments was protected by privilege, 161 B.R. 577, 581- 83 (S.D.N.Y. 1993), and In re Scott Paper Co. Sec. Litig., 145 F.R.D. 366, 370 (E.D. Pa. 1992).
- 107.
LaSalle National Bank, et al., v. Duff & Phelps Credit Rating Co. and Shawmut Bank Connecticut, N.A.,951 F. Supp. 1071 (1996).
- 108.
Ibid.
- 109.
For the definition of “offering memorandum”, see Glossary.
- 110.
For definition of “Ponzi scheme”, see Glossary.
- 111.
For definition of “bond”, see Glossary.
- 112.
LaSalle National Bank, et al. at pp. 1075–1076.
- 113.
Ibid. at 1076.
- 114.
Racketeer Influenced and Corrupt Organizations Act (RICO) (1970) Chapter 96, Title 18, United States Code, §1961–1968, Title IX of the Organized Crime Control Act of 1970, Pub. L. No. 91-452, 84 Stat. 941 (Oct. 15, 1970), codified at 18 U.S.C. Ch. 96, §§1961–1968. http://itlaw.wikia.com/wiki/Racketeer_Influenced_and_Corrupt_Organizations_Act.
- 115.
Haynes (2013), pp. 365–397.
- 116.
- 117.
Genesee County Employees’ Retirement System et al v. Thornburg Mortgage Securities Trust 2006-3 et al, U.S. District Court, District of New Mexico, No. 09-00300 (12 November 2011).
- 118.
330 F.3d 104 (2d. Cir. 2003).
- 119.
For the definition of “subpoena”, see Glossary.
- 120.
State of Connecticut v. Moody’s Corporation et al. No. X04HHDCV106008836S, 54 Conn. L. Rptr. 116, (2012 WL 2149408 (Conn.Super.) (10 May 2012). http://www.cafalawblog.com/Case%208%20Connecticut%20v%20%20Moody%27s%20Corp%20.pdf.
- 121.
Ibid.
- 122.
Conn. Gen. Stat. §§ 42-110a et seq.
- 123.
Pursuant to Conn. Gen. Stat § 42–110m.
- 124.
State of Connecticut v. Moody’s Corporation et al (2012) at p. 9.
- 125.
Stoel Rives, LLP. “How Does a Lawsuit Work? Basic Steps in the Civil Litigation Process” (24 January 2012) http://www.stoel.com/showarticle.aspx?show=963.
- 126.
N.Y. Civ. Rights Law Ï 79-h (a) (6).
- 127.
In re Fitch, Inc., 330 F. 3d 104—Court of Appeals, 2nd Circuit 2003, 330 F.3d 104 (2003).
- 128.
Para 17, Ibid.
- 129.
N.Y. Citv. Rights Law § 79-h (McKinney 2002).
- 130.
Ibid. § 79-h (b).
- 131.
See Gonzales v. Nat’l Broad. Co., Inc., 194 F.3d 29, 32 (2d Cir.1999), endorsing journalistic privilege for non-confidential information; in re Petroleum Prods. Antitrust Litig., 680 F.2d 5, 7 (2d Cir.1982) (per curiam), recognising privilege for confidential information.
- 132.
See 12 C.F.R. § 560.40 (2002).
- 133.
In re Fitch Inc. v USA PaineWebber, 330 F. 3d 104 (2003), footnote 1.
- 134.
Von Bulow v. Von Bulow, 811 F.2d 136 (2d Cir. 1987).
- 135.
In re Pan Am Corporation, 161 B.R. 577 (1993) at 583.
- 136.
The testimony of Kevin Duignan mentioned in In re Fitch, Inc., 330 F. 3d 104—CA, 2nd Circuit 2003, 330 F.3d 104 (2003) at 110.
- 137.
In re Fitch, Inc., 330 F. 3d 104—CA, 2nd Circuit 2003, 330 F.3d 104 (2003), p. 110.
- 138.
Auersperg v. von Bulow, 811 F.2d 136 (2d Cir.), cert. denied, 481 U.S. 1015, 107 S.Ct. 1891, 95 L.Ed.2d 498 (1987).
- 139.
Von Bulow, 811 F.2d at 144.
- 140.
Don King Prods., Inc. v. Douglas, 131 F.R.D. 421, 424 (S.D.N.Y.1990).
- 141.
Von Bulow, 811 F.2d at 142.
- 142.
161 B.R. 577, 580–582 (S.D.N.Y. 1993).
- 143.
161 B.R. 577 (1993) ag 582.
- 144.
In re Pan Am Corp (1993) at 582.
- 145.
Ibid.
- 146.
In re Fitch, Inc., 330 F. 3d 104—CA, 2nd Circuit 2003, 330 F.3d 104 (2003), p. 110.
- 147.
Kotz (2009).
- 148.
U.S. Securities and Exchange Commission (2003). http://www.sec.gov/news/studies/credratingreport0103.pdf.
- 149.
Securities and Exchange Commission 17 CFR Parts 240 and 249b (2 February 2009), by adding new paragraph to Rule 17g-5 at pp. 38–39. http://www.sec.gov/rules/final/2009/34-59342.pdf.
- 150.
Schoengold & Sporn, “Summary of the Private Securities Litigation Reform Act (PSLRA) of 1995”, http://www.spornlaw.com/faqs/pslra.php.
- 151.
Ibid.
- 152.
For definition of “issuer”, see Glossary.
- 153.
Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767, 777, 106 S.Ct. 1558, 89 L.Ed.2d 783 (1986).
- 154.
497 U.S. 1, 110 S.Ct. 2695.
- 155.
Milkovich at 19–20.
- 156.
Ibid. at 20.
- 157.
See below Sect. 6.10.2 for “out-of-court settlement”.
- 158.
In re Daisy Sys. Corp., 97 F.3d 1171, 1175 (9th Cir.1996) (citing Jackson v. Johnson, 5 Cal.App.4th 1350, 1355, 7 Cal.Rptr.2d 482 (1992).
- 159.
245 BR 151—Dist. Court, CD California, 1999. It is a political subdivision of the State of California.
- 160.
See, e.g., Michaelis v. Benavides, 61 Cal.App.4th 681, 687, 71 Cal.Rptr.2d 776 (1998).
- 161.
The actual malice standard supplies the breathing space the First Amendment requires. See New York Times Co. v. Sullivan, 376 U.S. 254 (1964) and Hustler Magazine v. Falwell, 485 U.S. 46, 56, 108 S.Ct. 876 (1988).
- 162.
County of Orange at 161.
- 163.
McLaughlin and Faux (2011).
- 164.
Ibid.
- 165.
Stempel and Viswanatha (2012).
- 166.
Viswanatha and LaCapra (2013).
- 167.
See Stempel and Viswanatha (2012).
- 168.
In USA v Standard and Poor’s, in US District Court, California, Case No. CV13-00779 (4 Feb 2013), the US Department of Justice has filed a case against S&P as compensation for civil money penalties. http://www.justice.gov/iso/opa/resources/849201325104924250796.PDF.
- 169.
Barrett (2014).
- 170.
Viswanatha and LaCapra (2013).
- 171.
Quoted by J. M. Karmasek, “New S&P suits welcomed by Miss. AG Hood”, Legal Newsline (13 February 2013).
- 172.
United States of America v McGraw Hill Company, Inc., and S&P, Case No. CV13-00779-Doc. https://s3.amazonaws.com/s3.documentcloud.org/documents/566542/united-states-of-america-v-mcgraw-hill-companies.pdf.
- 173.
In violation of U.S. Code—Title 18- Crime and Criminal Punishment, Chapter 63—Mail Fraud and other Fraud Offences, § 1341. http://www.law.cornell.edu/uscode/text/18/part-I/chapter-63.
- 174.
Ibid. § 1343.
- 175.
Ibid. § 1344.
- 176.
The US Department of Justice, “Department of Justice Sues Standard & Poor’s for Fraud in Rating Mortgage-Backed Securities in the Years Leading Up to the Financial Crisis” (5 February 2013). http://www.justice.gov/opa/pr/2013/February/13-ag-156.html.
- 177.
Ibid.
- 178.
Leonard (2013).
- 179.
McLaughlin (2013).
- 180.
”Court Throws Out Suit Against Moody’s and S&P”, New York Times (1 April 2010). http://www.nytimes.com/2010/04/02/business/02credit.html?_r=0.
- 181.
Case number 2:09-cv-1054 (2009).
- 182.
Case: 11-4203, File 12a0398p.06 (17 September 2011).
- 183.
Ibid.
- 184.
Kravitz (2012), p. 1, 17th para.
- 185.
Aloisi (2010).
- 186.
Gosselin (2011).
- 187.
See McLaughlin and Faux (2011).
- 188.
Lattman (2013).
- 189.
Brown and Chandler (2005), p. 244.
- 190.
Ibid.
- 191.
See Glossary.
- 192.
Turner (2007), p. 382.
- 193.
Chitty (2004), p. 1075, paras 18-003.
- 194.
Ibid., p. 1229, paras 18-001.
- 195.
Lavelle (2007), para 30, page 9.
- 196.
See Dunlop v Lambert (1839) 6 Cl & F 600; St Martin’s Property Corp Ltd v Sir Robert McAlpine Ltd (1994) AC 85; Darlington BC v Wiltshire Northern Ltd [1995] 1 WLR 78.
- 197.
For English statutory provision, see Contracts (Rights of Third Parties) Act 1999.
- 198.
L. J. Dillion, in Darlington BC v Wiltshire Northern Ltd [1995] 1 WLR 78.
- 199.
(1839) 6 Cl & F 600.
- 200.
(1994) AC 85.
- 201.
Lavelle (2007), para 76, page 19.
- 202.
(Lord Lloyd dissenting) Rich (Marc) & Co AG v Bishop Rock Marine Co Ltd, The Nicholas H [1996] AC 211, [1995] 3 All ER 307 HL.
- 203.
Donoghue v Stevenson [1932] AC 562 at 579–580. Negligence is a common word and refers to a type of fault and is synonymous to carelessness.
- 204.
Hedley Byrne & Co. v Heller Partners [1964] AC 465.
- 205.
Esso Petroleum Co. Ltd. v. Mardon [1976] QB 802.
- 206.
Section 2 (1) of the Misrepresentation Act 1967.
- 207.
[1931] UKHL 3, 1932 SC (HL) 31, [1932] UKHL 100, [1932] AC 562. http://www.bailii.org/uk/cases/UKHL/1932/100.html.
- 208.
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465.
- 209.
Rowling v Takaro Properties Ltd [1988] AC 473 at 501.
- 210.
Earle (1990), pp. 80–81.
- 211.
Attorney-General v Carter [2003] 2 N.Z.L.R. 160. See also Hemraj (2004), p. 119.
- 212.
Donoghue v Stevenson [1932] AC 562, See also Turner and Hodge (2010), p. 23.
- 213.
[1978] A.C. 728; [1977] 2 All E.R. 492; [1977] 2 W.L.R. 1024, See also, Richard Kinder, “Resiling from the Anns Principle: The Variable Nature of Proximity in Negligence” (1987) 7 Legal Studies 319.
- 214.
Caparo Industries v Dickman [1990] 1 All ER 568, HL. See also Hemraj (2006), pp. 82–89.
- 215.
(Lord Lloyd dissenting) Rich (Marc) & Co AG v Bishop Rock Marine Co Ltd, The Nicholas H [1996] AC 211, [1995] 3 All ER 307HL.
- 216.
Junior Books Co Ltd v Veitchi Co Ltd [1883] 1 AC 520.
- 217.
Rich (Marc) & Co AG v Bishop Rock Marine Co Ltd [1996] HL.
- 218.
Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200.
- 219.
Smyth and Fleming (2014).
- 220.
- 221.
[2014] FCAFC 65.
- 222.
Freehills (2014).
- 223.
Freehills (2014).
- 224.
Edwards (2013), p. 90.; a sophisticated litigant is required to prove dishonesty according to Hamblen J. in Cassa di Risparmio della Repubblica di San Marino v Barclays Bank [2011] EWHC 484 (Comm): www.bailii.org/ew/cases/EWHC/Comm/2011/484.html.
- 225.
ABN AMRO Bank NV v Bathurst Regional Council [2014] Para [572].
- 226.
Para [573].
- 227.
Woolcock Street Investments Pty Limited v CDG Pty Limited (2004) 216 CLR 515 at 530–531 [23]–[24] (Gleeson CJ, Gummow, Hayne and Heydon JJ).
- 228.
ABN AMRO Bank NV v Bathurst Regional Council [2014] Para [575].
- 229.
Ibid. Para [593].
- 230.
Esanda Finance at 252 (Brennan CJ) and 302 (Gummow J) approving Al Saudi Banque v Clark Pixley [1990] Ch 313 at 330. Para [577].
- 231.
Kestrel Holdings Pty Limited v APF Properties Pty Limited (2009) 260 ALR 418 at 435–436 [94]; BT Australia Limited v Raine & Horne Pty Limited [1983] 3 NSWLR 221 at 232 approving Derring Lane Pty Limited v Fitzgibbon (2007) 16 VR 563 at 571–572 [41]-[48]; Caparo Industries Plc v Dickman [1990] 2 AC 605 at 638 and Hedley Byrne & Co Limited v Heller & Partners Limited [1964] AC 465, where Lord Oliver noted that the identity of the person to whom the information was to be conveyed was not known by the defendant bank.
- 232.
Esanda Finance at 265; San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340 at 357 and Henderson at 180.
- 233.
Authorities quoted by the appeal court were Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529 at 573–574; Hedley Byrne [1964]; Henderson v Merrett Syndicates Ltd [1994] UKHL 5; Aiken v Stewart Wrightson Members Agency Limited [1995] 1 WLR 1281; Kestrel Holdings; Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd (2007) 164 FCR 450 and BT Australia, at Para [616(2)].
- 234.
Para [616(3)] at 156.
- 235.
Evatt at 570 (Barwick CJ); Hedley Byrne at 492–493 (Lord Reid) and 504 (Lord Morris) and Derring Lane at 570 [36]-[38] (Ashley JA, Buchanan JA and Kellam AJA agreeing).
- 236.
Para [603].
- 237.
Para [613].
- 238.
Freehills (2014).
- 239.
Werlen and Gaila (2014).
- 240.
Hallman (2013).
- 241.
Partnoy (2006).
- 242.
Darbellay and Partnoy (2012), p. 16.
- 243.
Partnoy (1999).
- 244.
See Ellis et al. (2012), pp. 175–222.
- 245.
Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200.
- 246.
ABN AMRO Bank NV v Bathurst Regional Council [2014] FCAFC 65.
- 247.
See State v. Southers, 1988 Ohio App. LEXIS 4648 (Ohio Ct. App., Pickaway County (23 November 1988).
- 248.
For definition of “persuasive authority”, see Glossary.
- 249.
Smith v Eric Bush [1990] 1 AC 831 at 858.
- 250.
Ibid.
- 251.
For definition of “negligence”, see Glossary.
- 252.
American Medical Association (2002).
- 253.
For definition of PII, see Glossary.
- 254.
Griffith (2011), p. 337.
- 255.
Bathurst Regional Council v. Local Government Financial Services Pty Ltd (No. 5) [2012] FCA 1200 (5 November 2012).
- 256.
See Deb and Murphy (2009).
- 257.
- 258.
Listokin and Taibleson (2010), p. 101.
- 259.
Ibid.
- 260.
[1990] 2 AC 605, House of Lords decision. For a summary of the judgement, see C. Mills, The Caparo Decision: A Summary of Judgement, London, Coopers & Lybrand Deloitte (April 1990).
- 261.
“Auditors liability conundrum – The need for auditor liability limitation in the UK”, Accountancy (August 2008). http://www.icaew.com/en/technical/audit-and-assurance/working-in-the-regulated-area-of-audit/audit-liability/auditors-liability-conundrum.
- 262.
Ibid.
- 263.
Submission of Professor D. Reiss at Brooklyn Law School mentioned by Hallman (2011).
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Hemraj, M. (2015). US Case Law Regulation. In: Credit Rating Agencies. Springer, Cham. https://doi.org/10.1007/978-3-319-17927-8_6
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