The Federal Court of Australia has upheld the Australian Securities and Investments Commission’s (ASIC’s) appeal of Macquarie Bank’s $82.5 million settlement with former Storm Financial investors.
In a victory for the corporate regulator, Federal Court Justices Middleton, Jacobson and Gordon ruled in favour of ASIC’s appeal against the $82.5 million settlement on the grounds that the distribution of settlement payments were not equitable among members of the class action.
In handing down the judgement yesterday, the bench explained that “on appeal, [ASIC] contended that the primary judge erred in finding that the distribution of the Settlement Pool as between all group members was fair and reasonable; We agree”.
“This is not an appeal where, if we had been in the position of the primary judge, we would have just taken a different course,” the published opinion stated.
“With respect to the primary judge, we consider that there were the errors of principle identified above which cannot be ignored.
“In the circumstances outlined, the settlement cannot be said to be fair and reasonable to all group members. A substantial wrong has occurred which the Court is obliged to correct.”
Under the original terms of the settlement, 317 former Storm investors – represented by Levitt Robinson litigators – would receive 42 per cent of the quantum of their claimed and lost equity contributions, while the remaining 733 unrepresented members would recover 17.6 per cent of their claims.
ASIC chairman Greg Medcraft said he welcomed the decision.
"The proposed distribution of the money was irrational and unfair,” he said.
“The disparity between the compensation outcomes for the majority of class action members and the minority of class action members and how that was disclosed, was at the heart of our concerns," said Mr Medcraft.
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 21 Aug 2018Product design laws could ‘undermine’ FOFABy Tim Stewart
- 20 Aug 2018Carve-outs must be addressed before commissions: AIOFPBy Reporter
- 20 Aug 2018Professional year an opportunity for exiting advisersBy Reporter
- 20 Aug 2018IOOF creates new executive advice roleBy Reporter
- 20 Aug 2018RBA attacks ‘sales’ culture within financial servicesBy Reporter
- 20 Aug 2018Super members ‘readily’ taken advantage of: RCBy Killian Plastow
- view all