DKN offers $3 million to Westpoint clients

Dealer group DKN Financial has offered $3 million “for the benefit” of clients who invested in Westpoint on the advice of its former subsidiary Deakin Financial Services (DFS).

A statement on the ASX today said the offer is conditional upon the DFS creditors “agreeing to a full release of any liability of DKN” at a creditors’ meeting planned for October 12.

In addition to the $ 3 million offer, DKN said it would “also waive its rights to receive any part of $1 million it claims it is owed from DFS”.

DFS creditors will also reportedly be entitled to a $5.75 million payment from DKN’s professional indemnity insurer QBE Insurance Group Ltd.

DFS was placed into voluntary administration in November 2006, with its clients reportedly having invested about $23 million in Westpoint property scheme products.

Administrator Ferrier Hodgson is understood to have received claims from DFS investors in Westpoint amounting to more than $16 million.

DKN chief executive Phil Butterworth said DKN “has no legal obligation to pay this ($3 million) sum but has a moral responsibility to ensure DFS creditors achieve a meaningful settlement of their Westpoint claims”.

If the $3 million offer from DKN is approved, it will have a one-off net profit effect of about $2.1 million for the current half year, he said.