Rob Everett
Rob Everett
An investor group has filed a claim in the Wellington High Court against ANZ, which was Ross's banker.
Ross Asset Management was the country's biggest-ever Ponzi scheme when it collapsed in 2012.
The claim against ANZ is for breaching its duties as a banker to Ross Asset Management and negligence in managing the bank accounts.
The investors said that the bank knew, or should have known, that the scheme was running as a Ponzi.
In April, ANZ lost its court bid to stop the Financial Markets Authority sharing its Ross files with third parties.
A spokesman for the investor group, John Strahl, said: “We are disappointed that the ANZ took legal action for over three years against the FMA to try and stop it from passing on the results of its investigation to investors. However, the FMA prevailed ... through a Supreme Court ruling in favour of passing the information on to us. Such delays have simply prolonged the agony for RAM investors, many of whom have already psychologically written off their investment.
“Since receiving the FMA’s material we have sought our own independent analysis and legal advice. This confirms that we have a very good claim against ANZ and we are now proceeding with legal action.
“The claim is based on our view that the ANZ either knew that David Ross at Ross Asset Management was running his business as a Ponzi Scheme or it should have known how one of its large fund management clients was operating its accounts. The ANZ is one of the largest fund managers in New Zealand and Australia – they know how client funds are meant to be managed.”
He said Ross Asset Management was meant to be holding investor funds in a client account to be invested on behalf of the client who deposited the funds. But ANZ did not require this and allowed the funds being deposited to be used for non-investment purposes, including paying expenses, reducing unauthorised overdraft with ANZ and also to repay other investors.
“It is on this basis the FMA came to the view that ANZ may be liable to a claim from the RAM investors for participating in Ross Asset Managements’s breaches of trust because of the way ANZ permitted the bank accounts of RAM to be operated."
Investors thought they had $450 million with Ross but only $10m was recovered. About 200 have signed up to the claim so far.
The FMA said the filing of proceedings marked the end of a battle to enable it to engage with investors so they could determine whether to bring a claim against ANZ.
“The Ross Asset Management Ponzi scheme was a major event for New Zealand’s financial markets and had a very significant impact on a large number of investors," chief executive Rob Everett said.
“For the past three years, the FMA has been responding to ANZ’s legal challenge to enable us to engage with and provide relevant information to Ross Asset Management investors.
“We invested considerable time and resources in litigating this matter, which went all the way to the Supreme Court. The FMA established the right for investors to make their own informed decisions and pursue their own claim.
“This matter raises important questions around bankers’ duties and we are pleased they will now be tested in the court.”
Everett said that given Ross Asset Management investors had decided to take this action, there was no need for the FMA to determine whether to use its statutory powers to pursue an action on their behalf.
“While the FMA has the power to take action on behalf of investors, it is obliged to consider the likelihood of individuals taking their own proceedings and diligently pursuing them.
“This action shows the process is working, with investors exercising their private rights to make a claim,," Everett said. “It has taken a long time to get to this point, but we think that this is the right result.”
David Ross is now eligible for parole but has not yet been successful in his applications.
A spokesman for ANZ said it, too, had been misled by Ross.
“ANZ strongly denies the allegations and will be defending the claim from the investors and the litigation funder.”
The action is being supported by LPF Group, the largest New Zealand based litigation funder who specialises in funding representative actions and large commercial claims.
| « UK experience a lesson in liquidity risk | Mann on a mission to diversify financial advice » |
Special Offers
No comments yet
Sign In to add your comment
© Copyright 1997-2024 Tarawera Publishing Ltd. All Rights Reserved