Judgement against GIO Directors welcomed by class action lawyers
24 August 2005
The NSW Supreme Court civil penalty finding against former GIO directors was a further vindication of the class action undertaken on behalf of 22,000 shareholders, the lawyer who ran that case said today.
Mr Bernard Murphy, Senior Partner of Maurice Blackburn, said the long awaited ruling today should send a strong message to the corporate world about its responsibilities to shareholders.
"This finding, and the successful class action taken, should crystallise for all directors and executives the importance of communicating accurately and responsibly to shareholders and the dire consequences if they do not," Mr Murphy said. "The GIO profit forecast, about which both the class action and the ASIC civil penalty case complained, proved to be wrong by $1 billion within 6 months of it being made. Shareholders suffered massive losses as a result of their reliance on the forecast."
ASIC commenced civil proceedings in June 2001 against three former GIO directors alleged to be responsible for the forecast. The trial began in 2003 and finished on 30 April 2004 with judgment reserved.
The Supreme Court today found that former directors Mr Vines, Robertson and Fox breached their duties during the course of AMP's 1998-1999 takeover bid for GIO Australia and further found Mr Fox to have breached his duty to act honestly. The court has not made formal orders on liability and on penalties.
Mr Murphy said the ASIC action followed a class action launched by Maurice Blackburn Cashman on 30 August 1999 against GIO Australia Holdings Limited, its board of directors and Grant Samuel & Associates Pty Ltd. The shareholders' case was that the statements were misleading, deceptive and/or negligent.
On 26 August 2003, the Federal Court approved a $97 million settlement of the GIO class action for 22,051 shareholders, the vast majority of whom are small investors. The settlement is the largest shareholder class action settlement in Australian legal history and represents a landmark for improved accountability to small shareholders and better corporate governance in Australia. The former shareholders received their compensation by way of two payments in February and March 2004.