LGFS happy with 'Rembrandt notes' court decision
Despite having to pay partial damages to Bathurst investors who lost millions on structured financial products, Local Government Financial Services (LGFS) said it was happy with the outcome of the Federal Court proceedings.
LGFS, which is owned by Local Government Super, was ordered to pay a third of the $16 million in damages to investors from Bathurst Regional Council over the on-sale of a complex financial product known as 'Rembrandt notes'.
The judge ruled that the amount payable by LGFS would be fully covered by its insurance company - Chartis.
This was "a matter that had been vigorously contested by the insurer and was the subject of a cross-claim in the proceedings," LGFS said in a statement.
The remaining two thirds in damages will respectively be paid to investors by ABN Amro for selling the notes, and researcher Standard & Poor's (S&P) for giving the failed product an "AAA" rating.
Furthermore, ABN Amro and S&P will pay close to $8 million each to LGFS for losses incurred when it sold a cache of Rembrandt notes to its parent company upon the downgrading of the notes by S&P.
"This is a very positive result for LFGS," said chief executive officer Peter Lambert. "We have succeeded in entirety in our claim against ABN Amro and S&P."
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