Standard & Poor\'s went on trial in Australia on Tuesday, accused of misleading several towns by giving top ratings to financial products that collapsed in the build-up to the 2008 global economic crisis. While several lawsuits are underway around the world, a spokesman for the Australian municipalities said it marked the first time that one of the big three credit risk agencies was being held to account in a court. Brought on behalf of 13 Australian towns, the federal court case claims S&P misled investors on the quality of Constant Proportion Debt Obligation notes (CPDOs), which the US agency slapped with top-notch triple-A ratings. However, within four months of the councils buying the notes from Australian firm Local Government Financial Service (LGFS) in late 2006, assured they had a less than one percent chance of failing, the synthetic derivatives defaulted. \"They had no underlying value... and the councils lost the bet,\" said John Walker, spokesman for IMF Australia, a publicly listed company that provides funding for large legal claims. \"Our clients lost about Aus$15-odd million dollars (US$14.22 million). Within four months they\'d lost 90 percent of their investment,\" Walker told AFP. The mostly small mining and farming towns in populous New South Wales state want their Aus$15 million dollars back, with interest, claiming the CPDOs\' premium rating led them to believe it was a safe, conservative investment. \"This is the first time the ratings agencies have fronted a trial on these issues,\" Walker said. S&P was unable to comment on the details of the case, which was filed against the British unit of its parent company McGraw-Hill. But the firm said the lawsuit \"lacks merit, and we are defending against it vigorously\". Walker said other claims had been filed in the United States and Europe but were yet to get to trial, and said the Australian case would be the first to see \"a rating agency in front of a court having to answer their involvement in the debacle\". The sale of risky investments such as mortgage-backed securities contributed to the worldwide financial meltdown in late 2008. \"These (securities) weren\'t regulated and they weren\'t controlled under the money supply of the reserve (central) bank in each of the countries,\" Walker said. \"Because they were synthetic they could just create as many as they wanted to, they didn\'t have to have a physical bond or whatever to tie it to, so they could do as many of these debts as they could find buyers for,\" he added. \"In 2005, 2006, the market went from billions to trillions.\" S&P is facing a US Securities and Exchange Commission probe into a mortgage-backed investment rating it gave on a product in 2007. The investment in question, Delphinus CDO 2007-1, was a package of collateralized debt obligations, which together with credit default swaps were widely blamed for the 2008 financial meltdown. S&P is also the subject of a separate SEC investigation over its decision in August to downgrade the US government\'s credit rating for the first time ever, which sent world markets into a panic. In the 10-week Australian trial, the plaintiffs will allege that S&P had \"insufficient historical background\" to assign the CPDOs a triple-A rating because they were new and untested, and that the rating was misleading. It also accuses the LGFS of failing in its duty to the councils by selling them the products, while S&P is counter-suing banking giant ABN AMRO, which created the CPDOs.