The corporate watchdog has reached an agreement to settle class actions against two Melbourne-based financial services firms, which had allegedly recommended to clients to invest in a company within the failed Westpoint Group.
The corporate watchdog has reached an agreement to settle class actions against two Melbourne-based financial services firms, which had allegedly recommended to clients to invest in a company within the failed Westpoint Group.
The Australian Securities and Investments Commission today said it had reached its third Westpoint settlement with Bongiorno Financial Advisors Pty Ltd and Bongiorno Financial Advisors (Aust) Ltd. The settlement of proceedings is subject to the approval of the Court.
The class actions, initiated in the Federal Court, relate to a claim for compensation for financial advice given by the companies which recommended clients invest in York Street Mezzanine Pty Ltd, a company within Westpoint.
This settlement approval application results from the global mediation initiated by ASIC to resolve the litigation commenced by it seeking compensation on behalf of Westpoint investors. It is the third settlement ASIC has reached following settlements with Masu Financial Management Pty Ltd and Professional Investment Services Pty Ltd.
ASIC commenced proceedings against Bongiorno Financial Advisors (Aust) Ltd in December 2007 and against Bongiorno Financial Advisors Pty Ltd in February 2008 (together 'Bongiorno') alleging that the companies, in providing such advice, were negligent, engaged in misleading and deceptive conduct, and acted in breach of conditions of their respective Australian financial services licences.
The settlement with Bongiorno, if approved by the Court, will result in compensation being paid by Bongiorno to eligible investors (Group Members). The settlement was reached without any admission of liability by Bongiorno.
The process for approval of the settlement will include:
- ASIC writing to Group Members to provide details of the compensation they may receive and to advise Group Members of their right to lodge with the Court any objection to the settlement;
- ASIC placing an advertisement in a national newspaper advising that a settlement of the proceedings will shortly be considered by the Court;
- the parties and the Court obtaining a final determination as to the identity of the Group Members who will receive compensation under the settlement; and
- the Court considering ASIC, Bongiorno's and any Group Member's submissions as to why the settlement should or should not be approved.
Following ASIC's application to seek Court approval of the settlement, the Court made orders on 27 November. The Court gave ASIC approval to communicate with Group Members, providing details of the compensation they will likely receive and advising them of their right to object to the settlement. The Court will hear submissions for and against the approval of the settlement on 15 December 2009.
If the Court does approve the settlement ASIC will, following payment by Bongiorno and allowing for a period for any appeals, distribute compensation to Group Members.
