IOOF shareholder class action investigation taken to next level

8 October 2015
Australia’s leading class action law firm, Maurice Blackburn Lawyers, has reached a critical point in its investigation into a class action against listed finance company IOOF, and is inviting institutional and retail investors to register their interest and claims as of today.

Those that purchased IOOF shares between 1 December 2013 and 19 June 2015 can register their interest in participating in a class action by visiting this website: www.mauriceblackburn.com.au/IOOF 

Class action Principal Brooke Dellavedova said the allegations of corporate misconduct within IOOF, publicly aired first by Fairfax media and later by the Senate Economics References Committee, require close scrutiny on behalf of shareholders.

“The allegations against IOOF relate to deep and systemic problems with IOOF’s compliance culture, and suggest the research department was in need of a complete overhaul. IOOF didn’t reveal this to the market until forced to by media coverage, some months after it would appear the company was aware of the problems in its research team,” Ms Dellavedova said.

The allegations against IOOF are broad in scope and duration, and include allegations of:

  • Insider trading and front running;
  • Misrepresenting performance figures;
  • Making recommendations without a reasonable basis;
  • Failing to maintain proper compliance controls to manage conflicts of interest; and
  • Breaches of ASIC regulatory guidelines and legislation.

“For a financial services company that asked investors to trust its advice and products, it is unacceptable that it let its own internal research unit operate in such a cavalier manner, compromising the integrity of its advice, and ultimately the company’s share price.”

Reports allege that IOOF senior managers, including the Board, were aware of many of the allegations as they unfolded and did not report them to ASIC.

“Based on our investigations, we have serious concerns about whether IOOF has breached its continuous disclosure obligations under the ASX Listing Rules and the Corporations Act and whether it has engaged in misleading and deceptive conduct,” Ms Dellavedova said.

When the market was finally made aware of the alleged problems at IOOF, the reaction to the allegations was swift, with IOOF shares dropping 13.3 per cent to $9.24 (a drop of $1.42) on 22 June 2015, wiping $450m off the company’s market capitalisation.

A shareholder class action would aim to help investors recover losses caused by alleged failures to comply with continuous disclosure laws or misleading or deceptive conduct.

“Already the Senate Economics References Committee and the corporate regulator ASIC are investigating but a class action offers investors the best chance of recovering losses  suffered as a result of paying too much for their shares in IOOF,” Ms Dellavedova said.

“The class actions system is the fairest and most efficient way for large numbers of wronged investors to hold a company to account for breaches of the law, reclaim some of their investment, and deliver a strong message about acceptable corporate conduct.

“It’s also the safest way for investors to pursue compensation given the risk of an adverse outcome is borne by a litigation funder.”

The funder in this case is Harbour Fund III L.P., a fund which invests exclusively in litigation and arbitration, whose sub-advisor is the well-established UK based Harbour Litigation Funding Limited.

At this stage Maurice Blackburn anticipates a claim period of 1 March 2014 to 19 June 2015, but is investigating a broader period from 1 December 2013.

Affected shareholders should register at www.mauriceblackburn.com.au/IOOF 

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