avoiding the firing line

Avoiding the firing line

By Liam Egan

Financial advisers are encouraging their clients to join planned IMF-funded litigation against ANZ by some clients of failed stockbroker Opes Prime, according to the ASX-listed litigation funding company.

Litigation manager Charlie Gollow said a “significant number” of the more than 50 investors who have joined the planned series of group actions against ANZ had been referred to IMF by planners and brokers.

Gollow estimated that “altogether about 100 investors” will have joined the IMF-funded group actions against ANZ when papers are filed in the Federal Court “by late May or early June”.

“It appears that some advisers who have clients with Opes, which collapsed with investor losses of more than $1 billion, are seeing the IMF action as a significant way of enabling clients to recoup these losses,” he said.

“I guess the point is they feel they won’t be in the firing line if they have affected clients who join an ultimately successful action against ANZ to get their shares back or damages in lieu of their shares.”

On the other hand, Gollow said “about a quarter of the investors that have spoken to IMF in connection with joining the actions” had been advised to invest in Opes Prime by either a planner or broker.

IMF announced to the Australian Securities Exchange on April 18 that it proposed to fund claims of clients of Opes Prime against ANZ seeking either damages or the return of equivalent shares sold by ANZ.

“Our primary argument will be that ANZ just took the shares of these clients and sold them, and they didn’t have the right to do so,” Gollow said.

IMF is not currently planning to fund litigation against any planner or broker involved with Opes, as “our emphasis is on the ANZ action and, besides, we haven’t yet had anyone ask us to fund an action against any planner or broker”.

It is also not planning to fund actions over Lift Capital, another collapsed margin lending broker, also “because we have not yet been approached by any investors to do so – although we would probably welcome this”.

Meanwhile, Financial Industry Complaints Service (FICS) chief executive Alison Maynard said a “number of enquires” from the public had been received over Lift and Opes.

“So far, we have received one complaint from the public against a member of FICS in relation to Lift Capital, this being an adviser who advised someone to invest in LIFT,” she said.

15 May 2008