Wingecarribee Shire Council has today received payments totaling almost $7 million on three of its Dante series of collaterised debt obligations (CDO’s).
The news will be detailed by Council’s Manager of Finance and Business Services, Mr Barry Paull at this evening’s Ordinary Meeting scheduled to begin at 3.30pm at Council’s Elizabeth Street Chambers.
The news comes after Council took legal action in both the UK culminating with a win in the Supreme Court, and subsequently pursuing similar action in the USA.
Wingecarribee Shire Mayor and Chair of Council’s Finance Committee, Councillor Juliet Arkwright has expressed her delight at the developments.
“Today’s announcement is another positive step in Council’s strategy to manage the CDO issue,” she said. “It also vindicates Council’s decision to join the Belmont Group, which led the legal action to recover funds from the Lehman structured Dante CDO’s.”
Council expects further payments on its remaining Dante CDO to be forthcoming in the coming days including reimbursements for the majority of legal costs.
Council is also confident of a positive outcome in its other legal action in the Federal Court of Australia.
In September 2012 Justice Steven Rares ruled that the parties involved in the class action were entitled to compensation for losses incurred on investments they made on advice from Grange Securities, which was bought by Lehman Brothers Australia in 2007.
Justice Rares found the investors were not properly advised of the risks involved in highly complex financial products.
He said councils were often targeted by Grange Securities because they had ready access to large sums of money for investment, but the “high risk” nature of the investments made them unsuitable for local councils.
“I have found that Grange engaged in misleading and deceptive conduct in breach of [the act] when it promoted the SCDOs to the councils in terms of suitable investments,” he said.
“Council now awaits the final decision from Justice Rares in the Federal Court of Australia, where we are hopeful of further good news for council”, Councillor Arkwright said.