Bell Potter faces class action

More than 50 former clients of Bell Potter Securities, including some from Perth, have launched a class action against the stockbroking firm alleging it engaged in wrongful conduct by encouraging them to invest in Progen Phamaceuticals.

Slater & Gordon is leading the class action.

In documents submitted to the Federal Court in October, Slater & Gordon alleges Bell Potter manipulated the market in Progen shares and engaged in misleading and deceptive conduct when it encouraged clients to buy overvalued shares in the Brisbane-based biotech company.

This was ahead of, and subsequent to, it co-underwriting Progen's capital raising in 2007.

Slater & Gordon practice group leader Van Moulis said Bell Potter used an extensive national network of employed brokers to promote the investment ahead of the capital raising.

"We understand that Bell Potter brokers up and down the eastern seaboard recommended the stockto their clients, relying on Bell Potter analyst reports.

"Bell Potter brokers in Perth also recommended to clients, and ultimately purchased on their behalf, substantial numbers of PGL shares," he said.

"It is alleged in the class action that the reports published by Bell Potter's analysts improperly inflated the value of Progen stock and were then used by brokers to promote the stock to the firm's clients," Mr Moulis said.

The investors are seeking compensation from Bell Potter for their share trading losses, legal costs and interest resulting from the firm's wrongful conduct.

The class action is being supported by litigation funding firm, Litigation Lending Services.