ASIC appeals ‘unfair’ Macquarie settlement

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A settlement has been reached between former Storm Financial clients and Macquarie Bank, which will see the bank pay $82.5 million.

The Federal Court of Australia approved the settlement, but ASIC has appealed the decision. Under the settlement, around 315 investors who funded the class action will be reimbursed their legal costs and 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).

ASIC has questioned whether the distribution of the money is fair, because it is not in proportion to losses suffered. The appeal also questions 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;
  • Inadequate notice was given to class action members of the prospect of payment of a funders’ premium

ASIC deputy chairman Peter Kell said, “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".

Earlier this year ASIC also entered into an agreement with CBA to make available up to $136m as compensation for losses suffered on investments made through Storm Financial. The $136m was in addition to payments of approximately $132m CBA has already provided to Storm investors under its CBA Resolution Scheme.

  • Xavier on 27/05/2013 5:06:52 PM

    Most see class actions as throwing good money after bad but for those who take the risk there should be a premium. Those who do not participate for whatever reason should consider what they are getting for not taking the risk is free.
    Its a bit like winning lotto in a syndicate but not putting up any cash for the ticket do you deserve any of the prize?

  • Stephen on 27/05/2013 10:13:09 AM

    The old saying of you have to spend money (the class action) to make money (the class action settlement) seems to be the case here. I would have liked to have known the conditions of the class action as if there was a no win no fee condition, it would make you wonder why more people did not sign up. I think that some people just want to put it all behind them which could have been the reason to not go forward. Litigation is not viewed fondly by most Australians.

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