ASIC has gained court approval for a $2.5 million settlement on behalf of clients who invested in Westpoint products on Glenhurst Corporation’s (Glenhurst) advice.
The settlement is one of five obtained by ASIC as part of its compensation proceedings in the Federal Court, the regulator said.
It follows action initiated by the regulator in 2008 against Glenhurst, and in 2009 against its professional indemnity insurer QBE Insurance Australia.
“QBE Insurance must pay the approved settlement, which will then be distributed to eligible investors (group members) by Glenhurst’s liquidators,” ASIC said.
“It is anticipated that distribution of the settlement monies will occur in the first week of September 2010. The liquidators’ costs, as approved by the court, will be taken into account in the distribution.”
The settlement is now binding upon group members adjudicated by the court as being eligible to share in the $2.5 million sum.
The settlement “reflects ASIC’s first priority” that is focused on assisting and protecting retail investors, including seeking compensation when appropriate.
The class action, which was initiated against Glenhurst in the Federal Court in August 2008, seeks compensation for Glenhurst clients who invested in certain financial products issued by various companies within the failed Westpoint Group on the advice of Glenhurst.
The claim alleges that Glenhurst in providing such advice was negligent, engaged in misleading and deceptive conduct, and acted in breach of conditions of its Australian financial services licence.
In June 2009 ASIC initiated an action against QBE in the Victorian Supreme Court, seeking an indemnity under the terms of Glenhurst’s professional indemnity insurance policy, in respect of the claims made in the class action.
