The Australian Securities and Investments Commission (ASIC) has appealed the recent decision of the Federal Court of Australia to approve the settlement between former Storm Financial clients and Macquarie Bank Limited.
The settlement follows a class action brought against the bank by Sydney law firm Levitt Robinson.
The deal will see Macquarie Bank pay $82.5 million (inclusive of legal and administrative costs) in final settlement of the claims of 1050 Storm clients who took out margin loans with the bank.
According to the regulator, around 315 investors who funded the class action will be reimbursed their legal costs and also compensated for approximately 42 per cent of their losses – as estimated by Levitt Robinson – while around 735 Macquarie borrowers will only get back about 18 per cent of their losses.
During proceedings on May 2, ASIC intervened to express concerns about matters affecting the fairness of the deal but the next day Justice Logan approved the settlement.
Class apart
The regulator’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 per cent of class action members; and whether inadequate notice was given to class action members of the prospect of payment of a funders’ premium.
“Settlement of a class action should be undertaken in the interests of the class action group as a whole,” said ASIC deputy chairman Peter Kell.
“ASIC’s appeal raises the question whether this settlement was unfair to the 70 per cent 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 proceedings against Macquarie Bank, Bank of Queensland Limited and Senrac Pty Limited, with the watchdog alleging unconscionable conduct in connection with their dealings with Storm investors.
The trial is scheduled to start on June 3.
