ASIC to Appeal Settlement between Macquarie Bank and Storm Financial
Wednesday 29 May 2013 @ 9.50 a.m. | Corporate & Regulatory
ASIC has indicated that it will appeal the Federal Court of Australia's decision in Richards v Macquarie Bank Limited (No 4) [2013] FCA 438 (3 May 2013) approving an $82.5 million settlement between 1050 former Storm Financial clients and Macquarie Bank.
The basis of ASIC's appeal is that the decision should be tested as to its fairness; ASIC claiming that around 735 Macquarie borrowers would only be getting back about 18 percent of their losses while 315 investors who funded the class action will be reimbursed their legal costs and also compensated for approximately 42 percent of their losses, is unfair.
Even during the Federal Court proceedings on 2 May 2013 to approve the settlement, ASIC intervened to express its concerns about matters affecting the fairness of the deal, expressing concerns about:
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distribution of the money, which is not in proportion to losses suffered;
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whether a funders' premium for class action members who funded the action amounted to an unfair advantage for those members at the expense of the remaining 70 percent of the class action members; and,
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whether inadequate notice was given to class action members of the prospect of the payment of a funders' premium.
In a related matter in September 2012 the Commonwealth Bank settled its dispute arising from its dealings with Storm Financial with ASIC by agreeing to pay about $270 million to investors such amounting to a repayment of about 55 percent of their losses.
The settlement Macquarie Bank announced in March 2013 and approved by Justice Logan in the Richards case on 3 May 2013, followed a class action brought against the bank by the Sydney law firm Levitt Robinson. It will see Macquarie Bank pay $82.5 million which includes legal and administrative costs, as final settlement of the claims of 1,050 Storm Financial clients who took out margin loans with the Macquarie Bank.
The principal of Levitt Robinson is quoted by Lawyers Weekly as saying that: "it is inappropriate for the corporate watchdog to launch an appeal against an $82.5 million settlement between former Storm Financial clients and Macquarie Bank".
The appeal it is reported "questions whether the premium amounts to an unfair advantage to a small percentage of group members at the expense of the majority". Levitt Robinson is quoted further as saying: ". . . ASIC’s appeal is interfering with a freely-negotiated agreement that has been approved by the Federal Court."
SmartCompany reports that the trial is scheduled to start on June 3, 2013.
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