News Life and Health24 Apr 2018

Australia:Financial advice scandal worsens with likely shareholder class action

24 Apr 2018

A global law firm is investigating a possible class action against Australia's biggest wealth management company AMP, which has admitted to cheating customers and lying to the corporate regulator, the Australian Securities and Investments Commission (ASIC).

Quinn Emanuel Urquhart & Sullivan is considering taking up the challenge on behalf of shareholders after the company's share price sank since AMP began giving testimony on 16 April to the Royal Commission  into Misconduct in the Banking, Superannuation and Financial Services Industry, reports Australian Associated Press.

AMP shares have shed more than a A$1 billion (US$760 million) in market value since then.

Last week the 169-year-old company admitted it had charged customers fees for financial advice that was never delivered, and then repeatedly lied about its behaviour to ASIC.

The wealth management giant also faces possible criminal charges.

Quinn Emanuel is the largest law firm globally dealing with business litigation and arbitration, according to its website, and its Australian arm says it has already secured the backing of litigation financer Burford Capital.

Quinn Emanuel partner Damian Scattini said the evidence heard on AMP's misconduct was particularly damaging to "mum and dad" shareholders.

"The revelations of AMP's misconduct are especially upsetting given the people who were hurt - the ordinary mums and dads ... who have now lost their savings due to its dishonesty," Mr Scattini said yesterday.

The global law firm is urging shareholders who acquired stock between May 2013 and April 2018 to register their interest.

Last Friday, AMP chief executive Craig Meller resigned following the scandal, saying he was "personally devastated" after learning of behaviour that may yet result in staff facing criminal charges.

Also caught up in the scandal are the country's four big banks. AMP and the banks have already paid almost A$219 million in compensation to more than 310,000 financial advice customers charged fees for no service. In addition, financial advisers at the nation's biggest bank, Commonwealth Bank, had charged dead clients for financial advice.

The government said last week that it would double maximum prison terms for corporate crimes to 10 years, dramatically increase potential financial penalties from A$10 million to up to A$210 million or 10% of revenue, and ramp up ASIC's investigative powers.

Australian Treasurer Scott Morrison warned last Wednesday that financial sector executives responsible for widespread breaches of corporate law could be jailed.





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