The groundbreaking class action lawsuit launched by Levitt Robinson against Australia’s corporate regulator, the Australian Securities and Investments Commission (ASIC), has been attracting some media attention.
The claim alleges that ASIC committed the tort of “misfeasance in public office”, and was otherwise negligent, in its conduct of investigations into disgraced financial planning firm Storm Financial.
As, Daryl Passmore and Tony Raggatt reported in Queensland’s Courier Mail and the Townsville Bulletin last week,
The Australian Securities and Investments Commission is being sued in a class action by victims of the Townsville-based financial planning firm, run by Emmanuel and Julie Cassimatis, which failed six years ago with the loss of up to $3 billion of client funds.
… at the first court hearing in Sydney this week, ASIC’s counsel Jeremy Giles indicated the taxpayer-funded agency’s position would be that it had no such duty.
“I will say there’s no duty for a start. Yes,’’ Mr Giles told Justice Lindsay Foster.
Passmore and Raggatt went on to quote Levitt Robinson Principal Stewart Levitt:
Mr Levitt said the action was ‘’incredibly unique’’ in directly targeting the watchdog.
“The public depends on public agencies such as ASIC to look after them,’’ he said.
Thousands of investors lost their life savings in the collapse of the former Townsville-based financial planning company in 2009.
Mr Levitt said the class action would include investors who received financial advice from Storm and borrowed money to acquire financial products between November 1, 2007, and 31 January, 2009.
He said ASIC had all the knowledge it needed in 2007 to save Storm clients hundreds of millions of dollars in losses, but that it had failed to act or warn them.
Mr Levitt was also quoted by Laura Millan in the Financial Standard. As Ms Millan wrote:
Levitt told Financial Standard that it is possible to sue the regulator, but that no one has succeeded before. He expected the regulator’s defense to argue that ASIC acted in good faith, an argument that the plaintiffs will need to overcome.
The solicitor is confident that it has enough information to prove that ASIC took no action to protect consumers.
“Since 2010 we’ve been involved in proceedings against banks who were involved in Storm: Bank of Queensland, CBA, Macquarie Bank and Westpac,” Levitt said, and added that this has allowed the solicitor to gather a large amount of information on ASIC’s involvement in Storm.
“Others haven’t had that much information. We do, and we know where the mines are,” Levitt said.
Some further details of the claim were reported by John Kavanagh in Banking Day:
“ASIC failed to have regard to the investors, notwithstanding their duty to do so,” according to the amended statement of claim.
The claimants also argue that ASIC has a policy of “improperly” preferring the interests of the Commonwealth Bank (and its wealth management subsidiary Colonial) ahead of consumer interests.
This policy resulted in a delay in taking action against Storm and a failure to investigate the bank’s involvement in the matter.
According to the claim, if ASIC had exercised its powers “lawfully and in good faith” the plaintiffs and group members would have been made aware of the risks they faced much earlier and would have been in a position to take action.
Levitt Robinson is now accepting registration of eligible class members. Contact Nabil Mustafiz for more information on: 02 9286 3133 or firstname.lastname@example.org.