03-281 National wealth management company to pay 235,000 investors $67.2 million compensation
Wednesday 3 September 2003
Mr David Knott, Chairman of the Australian Securities and Investments Commission (ASIC), today announced that 235,000 investors in 21 superannuation and life insurance products will receive $67.2 million compensation by 31 December 2003.
The compensation is one of a number of undertakings by National Australia Financial Management Limited (NAFiM), National Australia Superannuation Pty Ltd (NAS) and MLC Nominees Pty Ltd (together, the National Group) to ASIC and to the Federal Court of Australia. The compensation undertaking is consistent with the 16 August 2002 announcement by the National Group.
These undertakings also address ASIC’s concerns that investors did not receive adequate and timely disclosure about the integration of the superannuation businesses of the National and MLC, or the subsequent unit price reduction of their investments on 30 October 2001.
‘Today’s settlement should send a strong signal that high disclosure and governance standards are required when superannuation funds are merged’, Mr Knott said.
‘The arrangements announced today conclude a lengthy and complex investigation by ASIC. The National Group cooperated to ensure that investors would be fully compensated and informed about the issues’, he said.
Under the enforceable undertaking to ASIC, $67.2 million compensation will be paid to 235,000 investors from shareholder funds. The compensation covers:
Under the enforceable undertaking, which runs until July 2006, the National Group must take steps to address ASIC’s concerns about corporate governance within the superannuation businesses, unit pricing and complaint handling including engaging external experts to review and report on these areas. The reports are to be provided to ASIC and must not be paid for from investors’ funds.
Under the undertakings to the Federal Court, the National Group:
- the unit price reduction on 30 October 2001 that lowered the value of their units by $60.3 million. On 16 August 2002, the National announced that it would repay this money; and
- a further $6.9 million in compensation that relates to historical errors in unit pricing by NAFiM over the last 10 years, which was identified by the National Group during the course of ASIC’s investigation.
ASIC commenced proceedings in the Federal Court because it considered that the National Group’s disclosure was misleading or deceptive, and that it failed to comply with the significant event disclosure obligations under the SIS Act. The National Group disputed the proceedings, which were finalised when the undertakings were provided to the Court.
Under the enforceable undertaking, the National Group has also agreed to pay the costs incurred by ASIC during its investigation and relating to the proceedings.
- has agreed to distribute a disclosure statement to all investors affected by the unit price reduction and publish it on their websites, and
- will implement a disclosure compliance program to ensure that it complies with its disclosure obligations under the Australian Securities and Investments Commission Act 2001 (ASIC Act), the Corporations Act 2001 and the Superannuation Industry (Supervision) Act 1993 (SIS Act).
ASIC commenced enquiries into the circumstances surrounding the October 2001 unit price reductions in July 2002. In September 2002, ASIC began investigating suspected contraventions of the law by the National Group in relation to superannuation integration, unit pricing by NAFiM and disclosure.
Copies of the Federal Court undertakings, the enforceable undertaking to ASIC and the disclosure statement are available at www.asic.gov.au.
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ASIC Website: Printed 04/18/2014