A West Australian charity is suing investment company Counterpoint and one of its former directors over claims of deceptive and misleading conduct that resulted in the loss of more than $1.5 million.
Senses Foundation, through Slater & Gordon Lawyers, has filed a case against Counterpoint over the advice provided by its former director, Peter Williamson.
The charity alleges Counterpoint failed in its duty of care and engaged in misleading and deceptive conduct between 2005 and 2007 while advising Senses.
"Senses Foundation trusted Counterpoint to invest the money safely and wisely so that the charity could continue to meet its future operating costs and the needs of its clients," Slater & Gordon commercial litigation practice group leader Mark Walter said.
"However, a recommendation was made that saw the charity investing its money into Basis Capital Funds that was linked to the US sub-prime debt market and the fund later collapsed."
Walter said the charity would never have placed money with Counterpoint if it knew its investment in the Basic Capital Funds was high risk.
"It wasn't informed of that and, as a result, it suffered significant losses," he said.
"Counterpoint ought to have known that this was a completely unsuitable, high-risk proposal for a charity, and that the money should have been invested in a more appropriate manner."
He said Senses was unaware its investment in the Basis Capital Funds had been high risk until it received a letter following the company's collapse.
Senses chief executive Debbie Karasinski said the discovery was "devastating" for the organsation.
"We were clear in our instructions to the adviser that Senses funds were to be managed with the aim of providing a secure income stream to the Senses Foundation and to avoid high risk for high return investments," Karasinski said.
Senses provides services to people with disabilities, with a unique speciality in the provision of services to people who have the dual sensory disability of deafblindness.
The case is being financially backed by LCM Litigation Fund.
