NSX Litigation Update – RE Claim, page-2

http://www.theaustralian.com.au/bus...es-out-of-court/story-fnko7zi0-1226959176362#

A class action brought by more than 2000 small unitholders against auditing and accounting giant KPMG has been settled out of court for at least $20 million.
Unitholders in the Premium Income Fund, an offshoot of Gold Coast-based finance, property and tourism group MFS, also known as Octavia, brought the case against KPMG, which was acting as the managed investment scheme’s compliance plan auditor. MFS collapsed in early 2008 owing about $3 billion.
The Federal Court case before judge Nye Perram was due to begin hearing from October. But KPMG started negotiating the settlement over the past couple of weeks, sources said.
While terms of the settlement are subject to court approval, litigation funder Bentham IMF does not expect any proceeds from the settlement to start flowing to unitholders until later this year.
The class action concerns a series of related-party transactions that allegedly occurred between 2006 and 2007 involving $147.5m of PIF funds allegedly used by MFS to improperly pay a September dividend in 2007 and to repay a $103m in debt to funder Fortress.
Although the amount of the settlement was not released, a source close to the negotiations said it was at least $20m.
Bentham IMF could earn up to about one-third of the $20m fee. However, the settlement deed is still to be put in place.
In a brief statement to the ASX yesterday, Bentham IMF said it would make a further announcement if and when a binding settlement deed was executed.
Last night, a KPMG spokesman said the firm had reached an in-principle settlement of proceedings by unitholders and the responsible entity of the managed investment scheme previously known as MFS Premium Income Fund “subject to federal court approval”. KPMG declined to comment further.
There are separate proceedings under way in Queensland brought by ASIC against a number of former MFS directors.
MFS co-founder Michael King, who is overseas, declined to comment, saying he was unaware of the outcome of the KPMG case.