ASIC has appealed the Federal Court's recent decision to approve the settlement between former Storm Financial clients and Macquarie Bank.
The settlement follows a class action brought against the bank by Sydney law firm, Levitt Robinson.
The settlement will see Macquarie Bank pay $82.5 million (inclusive of legal and administrative costs) in final settlement of the claims of 1,050 Storm clients who took out margin loans with the bank.
Under the settlement, around 315 investors who funded the class action will be reimbursed their legal costs and also compensated for approximately 42% of their losses (as estimated by Levitt Robinson), while around 735 Macquarie borrowers will only get back about 18% of their losses (as estimated by Levitt Robinson).
During proceedings in the Federal Court on May 2, 2013 for approval of the settlement, ASIC intervened to express concerns about matters affecting the fairness of the deal.
On May 3, 2013, Justice Logan approved the settlement.
ASIC’s appeal relates to:
the distribution of the money, which is not in proportion to losses suffered
whether a funders’ premium for class action members who funded the action amounts to an unfair advantage for those members at the expense of the remaining 70% of class action members, and
whether inadequate notice was given to class action members of the prospect of payment of a funders’ premium.
ASIC deputy chairman Peter Kell says settlement of a class action should be undertaken in the interests of the class action group as a whole.
“ASIC’s appeal raises the question whether this settlement was unfair to the 70% of class action members who did not, or were unable to, contribute to the funding of the action.”
ASIC’s various actions in connection with Storm continue, including its proceeding (brought in part on behalf of two former Storm investors) against Macquarie, BoQ and Senrac Pty Ltd, with ASIC alleging unconscionable conduct in connection with their dealings with Storm investors. The trial is scheduled to start on June 3, 2013.
ASIC has also alleged that Macquarie Bank, along with BoQ, was knowingly concerned in the conduct by Storm of an illegal managed investment scheme. Judgment in this case has been reserved.