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source: http://www.theaustralian.news.com.au/story/0,25197,24289822-20142,00.html

Court to rule on Opes Prime class suit


Richard Gluyas | September 04, 2008

A FEDERAL Court judge will rule in the next few weeks on an application by Opes Prime's financiers to strike out a $100 million-plus class action claim launched by law firm Slater & Gordon.

Justice Ray Finkelstein heard the application by ANZ and Merrill Lynch in Melbourne yesterday before retiring to consider his verdict.

The lead claimant in the class action, Imobilari, has alleged that more than 50 Opes customers entered into what they thought were margin lending arrangements, in which they would retain ownership of securities pledged as collateral.

ANZ and Merrill, however, subsequently took possession of the stock under securities lending arrangements, and realised it when Opes collapsed in March.

It is also claimed in the class action that the banks knew, or should have known, about Opes's misleading conduct, from its statements in the broker's promotional material, that clients retained beneficial ownership of any shares.

ANZ said in the lead-up to yesterday's hearing that the class action was flawed "in significant respects".

The bank said there was no evidence to suggest it had actual knowledge of Opes's conduct, and that the facility arrangements between the broker and its customers could not be seen as a mortgage.

The class action comes against a background of mediation discussions between the financiers and Opes's administrator, Ferrier Hodgson partner John Lindholm.

ANZ chief executive Mike Smith has said he is confident of the bank's legal position, despite an internal review finding that ANZ's $2 billion exposure to brokers was mismanaged.