”SMART” investment bankers ”sandbagged” Standard & Poor’s, the Federal Court of Australia was told yesterday. They had ”bulldozed” the ratings agency into delivering its premiere ”AAA” credit rating for a high-risk, and ultimately disastrous, financial product, according to evidence given to the Federal Court of Australia yesterday.

Documents submitted to the court show ABN Amro’s investment bankers were surprised to find that S&P did not even bother to do its own research for an ”independent” report on the disastrous ”Rembrandt” constant proportion debt obligation (CPDO – a derivative cousin of the infamous collateralised debt obligation or CDO but even more risky and noxious) notes. Rather, the ratings agency virtually cut and pasted a chunk of ABN Amro’s own analysis of the notes – even though this was the very bank seeking the credit rating and trying to sell the notes.

The class action by 12 NSW councils is suing S&P, the investment bank ABN Amro and the reseller of the Rembrandt notes.