The Federal Court today approved a $5.9 million compensation claim for a group of investors that were advised by Brisbane-based Professional Investment Services (PIS) to invest in the failed Westpoint Group.
The Federal Court today approved a $5.9 million compensation claim for a group of investors that were advised by Brisbane-based Professional Investment Services (PIS) to invest in the failed Westpoint Group.
The Australian Securities & Investments Commission has filed at least 16 civil actions in relation to Westpoint's failure, which collapsed in January 2006, including this compensation claim that will see eligible investors get back 62.5 per cent of their investment.
The settlement does not include any admission of liability by PIS and under the terms of the settlement, PIS has until November 30 to pay.
ASIC said the payout would be distributed equally to investors based upon the total capital they had invested on December 14 at the earliest if no appeal is filed.
Full announcement below:
Court approves compensation for Westpoint investors
Friday 30 October 2009
The Federal Court of Australia has approved the settlement of a compensation claim, initiated by ASIC, to clients who were advised by Professional Investment Services Pty Ltd (PIS) to invest in the failed Westpoint Group. Under the settlement, PIS must pay eligible investors (Group Members) $5.9 million.
The Court approved a distribution mechanism whereby the settlement sum will be distributed equally to Group Members based upon the total capital that they had invested. This will result in Group Members receiving 62.5% of the capital they invested.
On 7 September 2009, ASIC filed an application with the Federal Court in Brisbane seeking final determination of the identity of Group Members to whom compensation will be distributed and seeking approval for it to communicate with those Group Members. Subsequently ASIC provided details of the compensation Group Members would likely receive and provided them with an opportunity to object to the settlement.
The settlement is now binding upon the Group Members adjudicated by the Court as being eligible to receive the settlement sum of $5,945,176. Under the terms of the settlement, PIS has until 30 November to pay the settlement.
ASIC will distribute the settlement upon the expiration of the Federal Court appeal period or if an appeal is filed, upon the finalisation of that appeal. The earliest ASIC could distribute the settlement is 14 December 2009 (if no appeal is filed).
Background
In December 2007, ASIC commenced action against PIS in the Federal Court of Australia. ASIC alleged PIS was negligent in its provision of advice to investors in relation to the Westpoint Group, and breached its Australian financial services licence. PIS was one of seven Australian financial service licensees against whom ASIC commenced proceedings for compensation on behalf of Westpoint investors.
The investors in Westpoint-related financial products had an outstanding total capital invested of $393 million as at January 2006 when the Group collapsed. Since November 2007, ASIC has commenced 19 civil actions seeking to recover funds for investors in the majority of the Westpoint companies, including:
a claim against KPMG, the former auditors of the Westpoint Group;
claims against the directors of nine Westpoint mezzanine companies, and various entities associated with a director;
claims against seven financial planners; and
a claim against State Trustees Limited.
ASIC subsequently obtained court orders for a global mediation of the actions commenced by ASIC for compensation arising from the failure of the Westpoint group.
