IOOF Holdings is facing class action from some of its shareholders, following evidence given at the royal commission alleging that the firm’s subsidiaries and staff knowingly breached their duties as superannuation trustees.
Quinn Emanuel Urquhart & Sullivan is filing the lawsuit on behalf of investors who purchased shares in the company between 27 May 2015 to 6 December 2018.
The class action will allege that IOOF was aware that its conduct would have significant legal and regulatory risks during those three years, saying the wealth management company breached its continuous disclosure obligations and engaged in misleading or deceptive behaviour.
The claim is being backed by litigation funder Regency Group.
In wake of the allegations during the royal commission, APRA launched legal proceedings against subsidiaries and directors of IOOF in December seeking to disqualify those involved from acting as superannuation trustees.
IOOF shares suffered as a result, plummeting to a five-year low, with a drop of more than 35 per cent from August 2018 to December.
The firm’s shares somewhat recovered in February by around 30 per cent, but have not returned to what they were prior to December.
The class action is occurring as the company is facing $75 million court action against IOOF subsidiary Australian Executor Trustees (AET), over the loss of investors’ money in a forestry scheme from the 1980s.
IOOF remains one of Australia’s largest wealth management companies with more than 500,000 customers and a current market cap of more than $2 billion.
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