The only thing the credit-rating agencies lost in the financial crisis was their reputation, despite midwifing the disaster. Now they're at risk of losing a little bit more.

A federal judge in Australia has ruled that Standard & Poor's misled investors about the quality of derivative monstrosities called constant proportion debt obligations (CPDO) dubbed "Rembrandt" notes. These were created by the Dutch bank ABN Amro's wholesale banking unit, stuffed with credit default swaps on corporate debt and sold to local governments in Australia in 2006.

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