ASIC escapes sanction over Storm collapse
Deficiencies in a statement of claim made by victims of the Storm Financial collapse, have seen their allegations of misfeasance and negligence against the Australian Securities and Investments Commission (ASIC) dismissed by the Federal Court of Australia.
The victims claimed that ASIC was aware of the risks posed by Storm's advice model, and breached its duty of care by failing "to do certain things to disclose, address, minimise or avoid", in a further amended statement of claim (FASOC), the firm's collapse.
In a 277 point judgment, Federal Court Justice, Jacqueline Gleeson, said the statement of claim was "so deficient" it was liable to be struck out in its entirety.
"To the extent that it is alleged that ASIC should have imposed a licence condition upon Storm, the FASOC is deficient in that it does not allege that, had the relevant licence condition been imposed, the plaintiffs would not have suffered financial loss," Justice Gleeson said.
"The plaintiffs have had ample opportunity to plead a reasonable cause of action. The first directions hearing in this action was held on 4 February 2015.
"At that directions hearing the plaintiffs sought an adjournment of three months, with no directions to progress the action. The adjournment was sought because the plaintiffs had made an application under the Freedom of Information Act 1982 (Cth).
"Over ASIC's opposition the plaintiffs were granted the three month adjournment on the basis that, in that three month period, the statement of claim would be put into the form which constituted the plaintiffs' ‘final effort', to which they were ‘committed'.
"There is no reason to believe that the plaintiffs are able to plead additional facts that would support a reasonable cause of action. Accordingly, I will not grant leave to the plaintiffs to file a second further amended statement of claim."
AUTHOR
Nicholas O'Donoghue
Recommended for you
The RBA has handed down its much-anticipated rate decision, following widespread expectations of a close call.
Two national advice businesses have merged to form a leading holistic advice business with $2.5 billion in funds under management.
Insignia Financial has completed its transition of a range of administration and technology functions to SS&C Technologies as it seeks to be a leading wealth manager by 2030.
ASIC has permanently banned a financial adviser after he allegedly concealed information from clients and misused client funds, among other breaches.
