0924 lehman
An employee poses for photographers with part of a Lehman Brothers company sign at Christie's auction house in London on September 24, 2010. - 

It's been four years since the investment bank Lehman Brothers went under, and a federal court in Australia has just found the bank liable for damages in a class action lawsuit over the sale of mortgage-backed securities.

It's the first case of its kind and could open the door to many more lawsuits from around the world.

Seventy-two city councils, church groups and other non-profits were part of the suit against Lehman’s Australian arm. The groups bought around $250 million worth of the now-infamous securities that were backed by sub-prime mortgages in the U.S.   Lehman told the groups the investments were AAA rated, but the court said Lehman’s advice was misleading.

"What we dealt with, says John Walker of IMF Australia, the company that funded the lawsuit, "is to see whether or not we'd make accountable an investment bank that actually sought to target not-for-profit organizations and make profit from selling derivatives to them.”

This was the first lawsuit to look at the conduct of an investment bank, on both legal and ethical grounds, in the lead-up to the global financial crisis. Others around the world will be now be encouraged with their attempts to recover money from what’s left of Lehman Brothers.

The Australian non-profits still have another case pending against Standard & Poor’s, the ratings agency that gave those securities their AAA rating.