Rich forces Morningstar to ‘sue itself’
The long-running dispute between Morningstar and its former Australian managing director Graham Rich has taken an unusual twist, with Rich putting the local arm of the global research firm in the extraordinary position of suing its US-based parent.
In an unlikely turn of events, Rich has been granted the right by the Supreme Court of NSW to incorporate a claim by the Australian subsidiary, Morningstar Research, within his own claim against the US-parent, Morningstar Inc.
Rich is claiming that, because he is a significant shareholder in the Australian business, and the business suffered as a result of the actions of the US parent, he has a right to include a claim by the local subsidiary in his case against the global research house.
“I believe that Morningstar Research has suffered substantial loss and damage as a result of the conduct of Morningstar Inc and some of its directors complained of in these proceedings,” Rich said in a statement.
“These proceedings seek to recover such damages. This is important because I remain a substantial, albeit disenfranchised shareholder.”
Rich has previously claimed he is entitled to 35 per cent of the shares in Morningstar Research in Australia — a point that is connected to the ongoing legal proceedings between the two parties.
The dispute dates back to 2001, when Rich was dismissed from the group in controversial circumstances. He subsequently made a multi-million dollar claim of damages against the research house.
He is alleging, among other things, that Morningstar Inc engaged in misleading and deceptive conduct.
Bevin Desmond, the president of Morningstar’s international business, said she was “disappointed” at the latest development in the case, but that the group was “confident that there is no basis for the damages claim and will strenuously defend the proceedings”.
“Morningstar Inc is disappointed that this has occurred, in circumstances where it has continually funded the Australian company since 1999, but accepts that the Court had no real option but to allow the statute-based claim to proceed,” she said.
Recommended for you
Far too few wealth managers are capitalising on the opportunity presented by disruptive technology to deliver personalised investment solutions to the mass affluent demographic, according to PwC.
With over half of advisers using managed accounts, HUB24’s head of managed portfolios has unpacked the benefits driving their usage and how they can be leveraged by advice practices.
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.
ASX-listed platforms HUB24, Netwealth, and Praemium have used their AGMs to detail how they are using artificial intelligence to improve their processes and the innovative opportunities it presents.
