The Australian Securities and Investment Commission has won Federal Court approval of a $2.5 million settlement on behalf of clients who invested in Westpoint on the advice of Glenhurst Corporation.
The Australian Securities and Investment Commission has won Federal Court approval of a $2.5 million settlement on behalf of clients who invested in Westpoint on the advice of Glenhurst Corporation.
It follows action initiated by ASIC in August 2008 against Glenhurst and in June last year against its professional indemnity insurer, QBE Insurance.
In a statement ASIC said QBE Insurance must pay the approved settlement which will then be distributed to eligible investors by Glenhurst's liquidators.
The money is expected to be paid in September.
See full ASIC statement below:
ASIC has successfully obtained court approval of a $2.5 million settlement on behalf of clients who invested in Westpoint products on the advice of Glenhurst Corporation Pty Ltd (Glenhurst).
Yesterday's settlement is one of five obtained by ASIC as part of its compensation proceedings commenced in the Federal Court and follows action initiated by the regulator in August 2008 against Glenhurst and in June 2009 against its professional indemnity insurer, QBE Insurance (Australia) Ltd (QBE Insurance).
QBE Insurance must pay the approved settlement which will then be distributed to eligible investors (Group Members) by Glenhurst's liquidators. It is anticipated that distribution of the settlement monies will occur in the first week of September 2010.
The liquidators' costs as approved by the Court will be taken into account in the distribution.
On 14 May 2010, ASIC filed an application to seek approval from the Federal Court in Melbourne to communicate with Group Members regarding the proposed settlement. Group members were subsequently provided with details of the proposed settlement and advised of their right to object.
The settlement is now binding upon Group Members adjudicated by the Court as being eligible to receive a share in the settlement sum of $2.5 million.
Yesterday's settlement reflects ASIC's first priority which is focused on assisting and protecting retail investors, including seeking compensation, when appropriate, under s50 of the ASIC Act.
Background
In August 2008, ASIC initiated a class action proceeding against Glenhurst alleging that in providing advice to clients who invested in certain financial products issued by the relevant companies in the failed Westpoint group, it was negligent, engaged in misleading and deceptive conduct, and acted in breach of conditions of its Australian Financial Services Licence (AFSL). Glenhurst is among seven Australian financial service licensees against which ASIC commenced proceedings for compensation on behalf of Westpoint investors.
In June 2009, ASIC initiated an action against QBE Insurance in the Victorian Supreme Court seeking an indemnity under the terms of Glenhurst's professional indemnity insurance policy, in respect of claims made in the class action.
On 18 September 2009, the former director of Glenhurst, Mr Anthony Kofkin, was banned for three years from providing financial services and 10 years from holding an AFSL.
The investors in Westpoint-related financial products had an outstanding total capital invested of $388 million as at January 2006 when the Group collapsed. Since November 2007, ASIC has commenced 19 civil actions seeking to recover funds for investors in the majority of the Westpoint companies, including:
* a claim against KPMG, the former auditors of the Westpoint Group
* claims against the directors of nine Westpoint mezzanine companies, and various entities associated with a director
* claims against seven financial planners
* a claim against State Trustees Limited.
