THE ASIC MEDIA RELEASE: “ASIC SETTLES IN STORM FINANCIAL PROCEEDINGS”
It never ceases to amaze that ASIC, as the regulator, supposed to be seeking to “raise the bar”, continues to engage in petty politics with “a small Sydney law firm”, namely Levitt Robinson and to mislead the public in the process.
Let’s just analyse ASIC’s press release of Wednesday, 29 May 2013 (attached) and establish a few facts first:
Barry and Deanna Doyle were specially selected by ASIC because they presented a “worst case” scenario. Their “facts” evidence gross and appalling excesses of imprudent banking practice at its worst.
Their case was not treated by ASIC, by the Defendants or by the Court, as a “test case”.
The settlement between Bank of Queensland, Senrac and Macquarie Bank is not binding on anyone else.
Indeed, because the case has now been “settled”, no legal benchmark has been established whatsoever. No legal precedent has been created and the settlement is manifestly not binding on any other person, any more than the earlier settlement between Helen Rubin and the Bank of Queensland, negotiated by Slater & Gordon, was binding on other Storm investors. Indeed, it is highly unlikely that Macquarie Bank would have agreed to the Doyle settlement if it were binding on others and had they not already resolved the Richards v Macquarie Bank Class Action.
ASIC had not made any progress in negotiations with Macquarie Bank by the time that we were engaged in final negotiations with Macquarie Bank to settle the Richards Class Action.
Moreover, the Queensland proceedings which ASIC has taken against Macquarie Bank are separate from the so called “Doyle proceedings”: In Queensland, ASIC has not sought damages and not undertaken that it will ever do so.
Indeed, Macquarie Bank, the Bank of Queensland and Senrac, have clearly agreed to the Doyle settlement because it is a “one off” and because it is not binding on anyone else; it is not a test case and no legal precedent is being set by this settlement.
In Doyle, all parties were facing a three (3) week trial over what ASIC now claims to be “top dollar” of $1.1 million. All of you would know that the three (3) week trial would cost a lot more than $1.1 million for each party to run.
There is a degree of “double speak” in the way ASIC refers to the Doyle settlement. They say that it will “fully compensate Barry and Deanna Doyle for their financial loss arising from their Storm investments, as calculated by independent experts retained for the proceedings and as calculated by ASIC under the compensation model that it has developed in connection with Storm”.
We all know from the ASIC Compensation Sum offered on behalf of CBA that it does not produce anything like “full compensation”.
If, however, the combination of Macquarie Bank paying something like the ASIC-CBA Compensation Sum and the Bank of Queensland and Senrac making up the difference, amounts to “full compensation”, one should well ask why ASIC, in its dealings with CBA (where CBA provided both home loans and Margin Loans to Storm investors) ASIC has not sought “full compensation” for CBA’s Storm victims, knowing as we all do, that CBA has been the most culpable of all of the banks in the Storm dėbâcle.
Does ASIC now propose to ask CBA to pay “full compensation” to all CBA Storm victims where they had both home loans and margin loans with CBA? If they do, we would support ASIC in this and we would recommend acceptance of offers that were made on that basis.
But the simple fact is, that no precedent has been set in Doyle and this is a “one off” deal for the Doyles, which ASIC is falsely spinning into something much more.
Be well advised, too, that our Richards v Macquarie settlement leaves the door open to further settlements with the Bank of Queensland, Westpac and CBA for example, where the Group members had Margin Loans with Macquarie and home loans with other banks, which was the position in the overwhelming majority of cases.
So, there is plenty of room for top up on the Levitt Robinson Macquarie deal.
There is no force in ASIC’s position taken with respect to the “70% of Class Action members who under the Macquarie v Richards settlement would recover about 18% of their lost net equity”.
The simple fact is that the Doyle deal would not have been possible if the Richards v Macquarie Bank deal had not been done. Macquarie Bank would have had no interest in doing the Doyle deal otherwise. Furthermore, ASIC did not and still does not have any claim pending or binding precedent upon which it can rely, to extract any more money for Macquarie Class Action Members than we have obtained through the Richards v Macquarie Bank process.
If ASIC were to run its own case to conclusion, there is no assurance that it would win and even if it did at first instance, the appeals could go on for several years and could be resolved either way.
It is a pity that ASIC continues to mislead the public, as it did in permitting Storm to operate for over a decade and even in many instances which have been identified to us, encouraging self funding retirees to invest their last dollars in Storm financial products.
Let the Richards v Macquarie settlement be set aside, if ASIC is prepared to indemnify all the Class Action members against their doing any worse if the case is reopened and also, if ASIC is prepared to wear the costs of the Group Members’ maintaining their proceedings.
ASIC is trying to “big note” itself and to protect the litigation funding industry, so that ASIC and third party litigation funders can continue to control the game as before and start and close down Class Actions at will, without reference to Group Members and permitting the third party litigation funders to make exorbitant profits at the expense of the plaintiff victims.
I am unaware of any circumstance where a law firm engaging a third party litigation funder to underwrite the costs of a Class Action, has sought the consent of the Group Members before doing so: this is generally because until the funding is in place, the Class Action does not even commence and the “Class” is not even established.
We were served yesterday, with ASIC’s Notice of Appeal over the Richards v Macquarie Settlement.
We will be vigorously defending that Appeal with every expectation of success.
The Honourable Ron Merkel QC (former Federal Court Judge) will be appearing with Douglas Campbell SC and Guy Donnellan, for the Richards Group Members.
We will also be seeking the costs of the Appeal, against ASIC.
We would ask each of the Richards v Macquarie Group Members to contribute $2,750.00 towards the costs of responding to the ASIC appeal.
In the meantime, there has been no stay of the settlement approval by His Honour, Justice Logan so it remains on foot.
CBA and Bank of Queensland Class Actions
Negotiations are proceeding
Westpac Class Action
Too early to say much yet.
Prospective Class Action against ASIC
Gaining traction rapidly.
STEWART A LEVITT
Principal Solicitor & Advocate