Macquarie Group has settled with Storm Financial investors for $82.5 million as part of an ongoing class action, which may yet have an impact on other firms. Commonwealth Bank of Australia, Macquarie Bank and Bank of Queensland have all faced ongoing legal scrutiny from both the Australian Securities and Investment’s Commission (ASIC) and groups of investors following Storm’s high-profile collapse in 2008.
In a statement, Macquarie said this commercial settlement was reached having regard to the complex and unique features of the extensive litigation.
“The settlement includes an acknowledgement by the investors that there was no wrongdoing by Macquarie,” a spokesperson for the investment bank said in a statement.
As the settlement requires the approval of the Federal Court of Australia, and because there is other related litigation, which remains ongoing, Macquarie would not make any further comment.
Ill winds blow
About 1000 investors are believed to have pursued the class action against the bank in the Federal Court in Brisbane, with legal firm Levitt Robinson arguing that the three banks were knowingly involved in supporting Storm’s unregistered managed-investment scheme.
While Stewart Levitt, a principal at Levitt Robinson, was not available for comment today, he told The Australian on the weekend that Macquarie had assisted Storm’s “self-serving, negligent and greedy financial planning which was basically telling people to put all their money into the stock market”.
ASIC has calculated investors lost about $830 million after Storm’s collapse, but increasingly it appears that the definition of “losses” will be challenged by the various class actions.
Levitt Robinson has begun a similar class action on behalf of 2000 investors against Commonwealth Bank and is also planning one against Bank of Queensland and Westpac.
Mark Weir, a co-chairman of the Storm Investors Consumer Action Group, welcomed the Macquarie settlement.
The Commonwealth Bank reached a settlement with ASIC in September last year to make available up to $136 million as compensation for losses suffered on investments made through Storm.
This amount is in addition to payments of approximately $132 million that CBA has already provided to Storm investors under its Resolution Scheme.
However, Levitt believes this is insufficient, making the point that investors introduced to Storm via the CBA would not recover 55 per cent of all money they lost, but just 55 per cent of the money that was borrowed from the bank in the form of margin loans to invest in Storm.
