10-39AD Federal Court approves fourth Westpoint settlement
Wednesday 3 March 2010
ASIC has successfully obtained court approval of a $13,500,000 settlement on behalf of Westpoint investors. This is the fourth settlement of ASIC’s Westpoint compensation proceedings approved by the Federal Court.
The class action, initiated by ASIC against Melbourne based trustee company, State Trustees Ltd (State Trustees), relates to investments made in Mezzanine Notes issued by Market Street Mezzanine Ltd (Mezzanine Notes), a company in the failed Westpoint group.
The settlement with State Trustees allows approximately 525 eligible investors to submit a proof of claim to participate in the distribution of the $13.5 million. It is estimated that Group Members should ultimately recover approximately 71 cents for every dollar they invested in the Mezzanine Notes.
The settlement is now binding upon Group Members. Under the terms of the settlement, State Trustees has until 15 March 2010 to pay the settlement sum to ASIC.
The settlement was reached without any admission of liability by State Trustees.
This settlement results from the global mediation initiated by ASIC to resolve the litigation commenced by it seeking compensation on behalf of Westpoint investors. It is the fourth settlement ASIC has reached following settlements with Masu Financial Management Pty Ltd (MR 08-217), Professional Investment Services Pty Ltd (09-173AD) and Bongiorno Financial Advisers Pty Ltd and Bongiorno Financial Advisers (Aust) Ltd (09-237AD).
ASIC will distribute the settlement sum, along with interest earned, to those Group Members who submit a valid proof of claim. ASIC expects to be able to distribute the settlement sum in the last week in August.
ASIC commenced proceedings against State Trustees in March 2008 alleging that State Trustees, as the trustee of an unsecured mezzanine notes issue by Market Street Mezzanine Ltd (In Liquidation), breached its duty to the holders of Mezzanine Notes and failed to comply with its obligations under the Corporations Act.
The investors in Westpoint-related financial products had an outstanding total capital invested of $388 million when the Group collapsed. Since November 2007, ASIC has commenced 19 civil actions seeking to recover funds for investors in the majority of the Westpoint companies, including:
a claim against KPMG, the former auditors of the Westpoint Group;
claims against the directors of nine Westpoint mezzanine companies, and various entities associated with a director;
claims against seven financial planners; and
a claim against State Trustees Limited.
ASIC subsequently obtained court orders for a global mediation of the actions commenced by ASIC for compensation arising from the failure of the Westpoint group.