Law firm Maurice Blackburn has been selected by the NSW Supreme Court to undertake a shareholder class action against AMP following the Hayne royal commission last year.
Five law firms, Maurice Blackburn, Slater & Gordon, Phi Finney McDonald, Quinn Emanuel Urquhart & Sullivan, and Shine Lawyers, all filed class action lawsuits against the financial services company seeking compensation on behalf of shareholders.
The actions followed a drop in AMP’s share price after testimony at the royal commission last year, which was followed by the resignation of AMP’s then chief executive and chairwoman and the dismissal of its general counsel after criticism of his handling of a report by Clayton Utz.
NSW Supreme Court judge Julie Ward chose Maurice Blackburn, whose funding model under their “no win, no pay” promise she considered the best.
“In the present case the combination of: absence of a separate funding commission; the incentive created by an uplift in fees only once a specified resolution sum is achieved; the comparable return based on standardised assumptions and the fact that no common fund order is being sought, seems to me to point in favour of the [Maurice Blackburn] funding model,” Justice Ward said.
The case against AMP alleges AMP engaged in misleading and deceptive conduct and breached its Corporations Act obligations when it failed to disclose its practice of charging fees for no service and in its interactions with ASIC.
An AMP spokesperson welcomed the decision to permit only one class action to proceed and said they would defend against the proceedings.
“AMP will continue to vigorously defend the class action proceeding. AMP denies the allegation that it had information that was required to be disclosed to the market regarding ‘fees for no service’ and AMP’s interactions with ASIC (including in respect of the Clayton Utz report).”
AMP also noted that Maurice Blackburn had been ordered to pay millions in security for AMP’s legal costs.
“The selected class action has been ordered to pay $5 million in security for AMP’s costs,” said AMP.
A class action by Slater & Gordon will be consolidated into the Maurice Blackburn case, but with the latter running the litigation alone.
Maurice Blackburn’s national head of class actions Andrew Watson was pleased with the result and said he looked forward to getting on with the job.
“We are pleased that the court accepted that Maurice Blackburn’s funding model could help deliver the best returns to group members. We look forward to getting on with the important job of obtaining a recovery for affected AMP shareholders,” he said.
Class actions typically take a long time to reach a conclusion with the next date set for next week for a directions hearing, which is a largely procedural issue.
Eliot Hastie is a journalist at Momentum Media, writing primarily for its wealth and financial services platforms.
Eliot joined the team in 2018 having previously written on Real Estate Business with Momentum Media as well.
Eliot graduated from the University of Westminster, UK with a Bachelor of Arts (Journalism).
You can email him on: [email protected]
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