Court halts Wealthsure class action
Clients seeking a class action to recoup losses incurred by former WealthSure Financial Services planner Colin James Oberg have seen the proceedings halted and been told they will have to pursue their claims separately through the courts.
Justice Buchanan in the New South Wales district of the Federal Court of Australia ordered that the proceedings no longer continue as representative proceedings after he found them to be flawed in their present form and "not by their nature proceedings which are innately suitable to proceed as representative proceedings".
Although the clients' class action was centred around the actions of Oberg, who was permanently banned from providing financial services in July 2012, their case was brought against WealthSure as his licensee at the time.
Oberg's former clients have claimed a breach of statutory duty of care and of negligence by WealthSure in its alleged failure to oversee Oberg while he was an authorised representative of WealthSure. They also claim WealthSure failed to notify them that he was no longer with the planning group after his authorised representative status was revoked in late 2010.
At the time of his banning, the Australian Securities and Investments Commission (ASIC) stated Oberg had withdrawn $1.55 million of client funds without permission, and had been an authorised representative of WealthSure at time of the withdrawals which took place between September 2007 and October 2008.
WealthSure revoked Oberg's authorised representative status in October 2010 when it notified ASIC of its concerns about Oberg.
In making his decision, Justice Buchanan did not comment on the validity of any of these claims but rather examined the composition of the group making the claim.
Members of the class action were identified as clients of Oberg who, between November 2008 and May 2012, gave him funds to invest and had suffered losses - and had since engaged the services of the same legal firm to act for them in the proceedings.
In his judgement Buchanan stated the class action group was not clearly defined at the start of proceedings, with some members appointing the legal firm which began proceedings to act for them in the class action after the case had begun.
This group definition was necessary as an enabling condition for a class action, with Justice Buchanan also noting that the group had changed legal counsel from Maddocks to Mills Oakley Lawyers during the case - effectively removing this condition for all members of the group.
Justice Buchanan also noted the absence of any common purpose in the action, stating there was "no suggestion that group members should share in any respect from a common pool".
"In every instance, individual orders are sought for individually calculated amounts to address individual losses. The proceedings are, in reality, proceedings which seek to vindicate the individual interests of a limited and known group of persons who might ordinarily be expected to advance their claims as applicants in their own right."
AUTHOR
Jason Spits
Recommended for you
A financial advice firm has been penalised $11 million in the Federal Court for providing ‘cookie cutter advice’ to its clients and breaching conflicted remuneration rules.
Insignia Financial has experienced total quarterly net outflows of $1.8 billion as a result of client rebalancing, while its multi-asset flows halved from the prior quarter.
Prime Financial is looking to shed its “sleeping giant” reputation with larger M&A transactions going forward, having agreed to acquire research firm Lincoln Indicators.
An affiliate of Pinnacle Investment Management has expanded its reach with a London office as the fund manager seeks to grow its overseas distribution into the UK and Europe.
