Standard & Poor’s global business may be at risk after an Australian judge ruled the company misled investors with triple-A ratings on derivatives whose value plunged during the global financial crisis, the rating company’s lawyer said.

“Business would be virtually impossible” if people are found to rely on the ratings and the company is held liable for investments that fail, Steven Finch, S&P’s lawyer, told a three-judge appeal panel in Sydney today in a bid to have the initial ruling overturned. “This is not investment advice.”

S&P, a unit of McGraw Hill Financial Inc., and two other defendants were found liable in November 2012 of misleading Australian towns and later ordered to pay A$20.2 million ($18 million) to the municipalities after the value of their triple-A-rated investments plunged. S&P is also fighting U.S. claims for as much as $5 billion in civil penalties and is being sued in Amsterdam by institutional investors.

The repackaging of debt into securities with top rankings from S&P and other rating companies contributed to more than $2 trillion in losses and writedowns as Lehman Brothers Holdings Inc. collapsed in 2008 and the world fell into recession.

S&P notes in reports that its ratings have limitations and issues disclaimers, Finch said. Investors must assume responsibility for the products they buy, he said.

“A user can’t say I’m just going to ignore the limitations,” he told the appeal panel.

Rembrandt Notes

ABN Amro Bank NV’s Australian business arranged the creation of the Rembrandt notes, which were given the highest rating by S&P and sold to councils by a municipal investment adviser.

The bank, now a unit of Royal Bank of Scotland Group Plc and no longer affiliated with the Dutch lender of the same name, earlier this week also urged the panel to overturn the liability finding.

ABN Amro Bank was a “mere conduit” passing on the rating that was determined by S&P, its lawyer Ian Jackman said. RBS bought ABN Amro Bank’s Australian operations in 2007 and rebranded the unit as RBS Australia the following year.

The towns sued the bank under the name it used when the derivatives were created.

Twelve Australian councils lost more than 90 percent of the A$16 million they invested in the notes, which were linked to credit-default swaps on investment grade companies. A 13th township sued separately.