A national law firm is considering a class action against embattled wealth giant IOOF.
APRA recently took measures to disqualify several key employees, including the chairman and CEO, from acting as a responsible officer or trustee of the group’s superannuation entity, IMIL.
IOOF managing director Christopher Kelaher and chairman George Venardos consequently agreed to step aside from their respective positions three days after APRA’s announcement.
Shine Lawyers has now taken a stance against IOOF and revealed it is currently proposing a claim against the company.
The law firm said it has undertaken a year-long investigation into alleged corporate misconduct within IOOF, with backing from ICP and Litigation Lending. The proposed claim will be subject to the finalisation of that investigation, as well as interest from IOOF shareholders.
“[Last week’s] action by APRA comes after revelations of alleged corporate misconduct within IOOF in the media in June 2015, followed by appearances by IOOF’s managing director and other senior executives at a Senate Inquiry in July and August 2015 and at the banking royal commission earlier this year. IOOF’s alleged misconduct dates back to at least 2007,” Shine Lawyers said in a statement.
Adding to this, Shine Lawyers special counsel for class actions, Craig Allsopp, who was formerly a senior lawyer in ASIC’s enforcement area, said: “We have been reviewing IOOF’s documents and preparing a claim against IOOF on behalf of shareholders”.
“We are investigating a number of instances of alleged misconduct, as well as whether IOOF had appropriate policies and processes to identify and report misconduct to regulators,” Mr Allsopp added.
“We welcome APRA’s actions against IOOF and we will look closely at what the regulator has to say about alleged misconduct by IOOF.”
Morningstar this week warned that class action lawsuits pose a significant risk to the listed wealth manager.
In a research note, analyst Chanaka Gunasekera noted that “several” class action lawyers are now indicating an interest in commending proceedings.
“At this early stage, estimating the cost of a class action has a high degree of uncertainty. As a reference point, a few years ago QBE Insurance settled a class action for about $132.5 million and we have forecasts likely class actions costs to IOOF of $150 million spread over fiscal 2020 and 2021,” he said.
Morningstar also expects ASIC to investigate the company over potential breaches of directors’ duties and the FOFA legislations.
The analyst has forecasted costs of around $50 million over the next two fiscal years.
“Notably, this is significantly higher than the maximum exposure to the royal commission recently guided to by the company, which in current circumstances, we expect is overly optimistic.”
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