Legal action seeking in excess of $50 million against the ANZ on behalf of investors in Ross Asset Management (RAM) is set to be heard by the High Court in Wellington next year.
A green light for the case was given by the court on Wednesday. (See earlier RAM articles here.)
RAM was tipped into liquidation in December 2012 after an investigation of its finances found only $10.24 million in funds and not the $449.6 million investors believed was being held. The collapse was investigated by the FMA and the Serious Fraud Office. Funds withdrawn from the scheme over five years exceeded those contributed by more than $60 million. RAM was essentially found to have been operating as a Ponzi scheme whereby existing investors were being paid returns on their money via new funds coming into the scheme.
RAM investor group spokesperson John Strahl said as of Wednesday 426 people - more than two-thirds of the RAM investors - had signed up for the action. "There's still more coming in and we expect that number to increase."
The court has set a deadline of January 31, 2020 for outstanding eligible RAM investors to opt in.
The case against ANZ alleges that it breached its duties as banker to Ross Asset Management, that it was negligent in managing the RAM bank accounts and for actions of knowing receipt and dishonest assistance in relation to payments made by RAM through the ANZ.
ANZ on Wednesday reiterated its comments that it would be defending the claim. "ANZ was Ross Asset Management’s banker and like the investors was misled by Mr Ross," an ANZ spokesperson said.
"ANZ strongly denies the allegations and will be defending the claim from the investors and the litigation funder."
The action being brought on behalf of the RAM investors is being supported by LPF Group, the largest New Zealand based litigation funder which specialises in funding representative actions and large commercial claims. They will fund the costs of the claims on behalf of the investors and will take a fee if successful. If the claims are unsuccessful LPF is required to pay the costs of the claims so investors should have no need to pay anything.
Strahl said the investors group was very pleased to have court orders granted so that all eligible investors have an opportunity to join the claim.
"Our legal advice remains that we have a very good case. We certainly look forward to seeing ANZ in court and shining a light on the behaviour that failed unsuspecting RAM investors. As the largest bank in New Zealand and one of the biggest fund managers it must have known how client accounts should have been operated and known that the way the RAM accounts were being operated was in breach of the laws. ANZ’s claim that it was also ‘misled’ thus holds no credibility.”
Strahl said the denial of the allegations and confirmation it will be defending the claim from ANZ was "fighting talk" that vindicated the decision of investor to bring on board the LPF Group.
"We are certainly well aware that a bank the size of the ANZ has deep pockets to take us all the way as it did with the FMA to try, unsuccessfully, to stop it from talking with us. Having suffered, in some cases, life changing losses, there was little appetite among RAM investors to throw more money at this, So having LPF on board we know that we can take this matter all the way if required.”