A trial investigating alleged misconduct by Insignia Financial is set to begin on Monday (5 June), after hundreds of investors represented by Shine Lawyers brought a class action against the firm in 2020.
The case will examine whether Insignia (formerly known as IOOF) failed to disclose alleged misconduct, including insider trading, front-running and failure to manage conflicts of interests.
“We claim that, by failing to disclose the alleged corporate misconduct and issues with its ‘roll-up’ business model between 1 March 2014 and 7 July 2015, the company breached its continuous disclosure obligations and misled its shareholders,” Shine Lawyers’ joint head of class actions, Craig Allsopp, said in a statement.
Barrister Michael Hodge KC, one of the counsels who assisted on the Hayne royal commission, will represent shareholders in the claim alongside Caspar Conde.
Insignia’s share price declined significantly following media reports about alleged misconduct first published in 2015, and revelations which arose during the royal commission in 2018.
The investors involved in the class action are seeking to recover the losses that they have experienced as a result.
“This financial service provider was trusted by investors to advise its clients and manage the funds they had placed with the company responsibly and ethically,” commented Mr Allsopp.
“We claim that the misconduct alleged in this case seriously undermined that trust and damaged the company’s reputation. It is unsurprising that the company has since abandoned its well-known ‘IOOF’ branding.”
Shine noted that shareholders who purchased Insignia shares during the period from 1 March 2014 to 7 July 2015 remain eligible to join the class action.
In a statement provided to ifa, an Insignia spokesperson said: “This case relates to events that are alleged to have occurred more than seven years ago and, in some cases, nearly 15 years ago”.
“Insignia Financial will vigorously defend the claim and is looking forward to having the matter heard and determined. Because the claim is currently before the court, Insignia Financial does not propose to comment further,” the spokesperson added.
The class action is being funded by Litigation Lending Services (LLS), whose chief executive officer, Stephen Conrad, said, “This case is yet another example of a failure of governance for a company that had a front row seat at the Hayne royal commission”.
A class action brought against IOOF by Quinn Emanuel was previously discontinued in May 2020, with no payouts made to the law firm or the shareholders it represented.
The US law firm had also alleged that IOOF contravened its continuous disclosure obligations under the ASX listing rules and engaged in misleading or deceptive conduct.
