Class action against Insignia Financial to commence
A trial investigating alleged misconduct by Insignia Financial Limited is slated to begin this coming Monday (5 June) and expected to run for up to five weeks.
The case against the wealth management company (formerly IOOF Holdings Limited) would examine whether the company had neglected its obligations to shareholders by failing to disclose alleged misconduct.
This included insider trading; front-running; failure to manage conflicts of interest; and issues with the company’s systems, data integrity, and cyber security; and whether the company’s ‘roll-up’ business model was materially compromised.
According to Shine Lawyers, who would represent hundreds of investors in the case, the company failed to disclose the alleged corporate misconduct and issues with its ‘roll-up’ business model between 1 March 2014 and 7 July 2015.
With the class action, the firm would seek to recover losses suffered as a result of alleged non-disclosures and potential misconduct affecting purchases of IFL shares.
On 8 May 2023, Shine Lawyers participated in a court-ordered mediation with Insignia Financial and its representatives. However, as a settlement was not reached between the parties, the class action would proceed to trial.
“This financial service provider was trusted by investors to advise its clients and manage the funds they had placed with the company responsibly and ethically,” said Shine Lawyers’ joint head of class actions, Craig Allsopp.
“We claim that the misconduct alleged in this case seriously undermined that trust and damaged the company’s reputation.”
He thought it “unsurprising” that the company had since abandoned its IOOF branding.
Allsopp said: “We will continue to fight this case to keep corporations honest. They owe transparency to shareholders and that’s what we’ll argue in court on Monday.”
Previous several shareholder and financial services class actions by Allsopp and his team would include claims against major corporations like AMP Insurance and CBA CommInsure.
Insignia Financial told Money Management it would "vigorously defend the claim" in court.
"This case relates to events that are alleged to have occurred more than seven years ago and in some cases nearly 15 years ago," a spokesperson said.
"Insignia Financial will vigorously defend the claim and is looking forward to having the matter heard and determined."
The firm declined any further comment on the legal matter that was currently before the court.
According to Stephen Conrad, chief executive of Litigation Lending Services (LLS) that was funding the class action, the case was “yet another example of a failure of governance for a company that had a front row seat at the Hayne royal commission”.
Although it would commence next week, shareholders who purchased IFL shares in the period from 1 March 2014 to 7 July 2015 were still eligible to join the class action.
The trial was expected to conclude by Friday, 7 July 2023.
AUTHOR
Rhea Nath
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
