Regulatory Regimes and Liability Issues
Chapter 10: AUSTRALIA
Chapter 10 provides critical reflections of Australian case law, namely the Bathurst judgment. This landmark case shows that a duty of care was held to be owed to investors by the credit rating agency in the absence of privity of contract: a CRA has been found to owe and have breached a duty to investors with whom it had no direct relationship. On this view, the duty to exercise reasonable care and avoid negligent misstatements in developing a rating is imposed on expert professionals. The Bathurst case demonstrated that the Australian courts regard credit ratings as expert statements of fact and established that a CRA plays a public role: this implies that it is not sufficient for a CRA to publish disclaimers stating that credit ratings are simple expressions of opinions. The Bathurst judgment may be attractive for courts because of the re-characterization of ratings as factual representations rather than opinions, which would make it much easier to impose liability on credit rating agencies for negligent misrepresentation.
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