Home / News / Class action puts more pressure on IOOF

Following forceful questioning by shareholders at its annual meeting last month comes news that a class action against IOOF, undertaken by Shine Lawyers, has progressed through the funding stage. A previously proposed action, through lawyers Quinn Emanual, was dropped early this year.

Patrick Liddy, the principal of MSI Group consultants, and Shine Lawyers have been speaking with “numerous wholesale investors”, including some big super funds and managers, interested in joining the current class action against IOOF for alleged corporate misconduct over 2014 and 2015.

Liddy said last week (December 9) that the response had been very positive. “Even fiduciary investors and managers who have significant stakes in IOOF will be better off taking part in the action, than not, on behalf of their own shareholders, clients and members,” he said.

The Shine Lawyers class action is another claim to be brought against the troubled financial services provider since the media exposed alleged illegal conduct within, causing the company’s share price to plummet in one day. The action is open to shareholders between March 1, 2014 and July 7, 2015. It is backed by litigation funder LLS Fund Services, which is a fund run by Litigation Lending Services Ltd.

The claim previously brought by APRA, through Quinn Emanuel, proved unsuccessful, with sides settling in May without costs being awarded. IOOF told the ASX that it did not need to make any payments to the opposing side, which included regulator APRA.

Craig Allsopp, Shine Lawyers class actions practice leader, who was formerly a senior lawyer in ASIC’s enforcement area, said IOOF would now be answerable to the court. “This class action is seeking redress for shareholders who have suffered substantial losses from the alleged wrongdoing by IOOF,” he said.

The wrongdoing includes alleged insider trading, front running, staff cheating on exams, breaches of trustee duties, and risk and governance failures between 1995 and 2015. Apart from being aired by Fairfax Media (now Nine) previously the issues were also raised at the Royal Commission into Banking and Superannuation in 2018.

Shine Lawyers alleges that by failing to disclose the corporate misconduct, IOOF breached its continuous disclosure obligations and/or engaged in misleading and deceptive conduct.

LLS recently confirmed its funding of the IOOF class action. LLS is a pioneer in litigation funding, having financed crucial representative legal action in Australia for more than two decades.

Stephen Conrad, the chief executive of Litigation Lending, said this class action was a step that had to be taken, given what has come out about IOOF’s conduct and the huge losses suffered by shareholders.

“We’re pleased to support this action which seeks to hold IOOF accountable for significant shareholder losses,” he said.

As of mid-February this year, IOOF shares were trading at $7.05, almost 34 per cent below its share price immediately prior to the Sydney Morning Herald articles published on June 20, 2015.

IOOF’s board and management came under fire at the November 25 annual meeting to prove the merits of the firm’s $1.4 billion takeover of NAB’s MLC business after receiving a hefty protest vote over executive pay at its annual general meeting.

Shareholders representing 19.6 per cent of the capital voted against IOOF’s remuneration report at the meeting on Wednesday, highlighting ongoing concerns from investors about the MLC takeover. News of the MLC deal in August, which will boost IOOF’s funds under management to $510 billion, triggered an investor sell-off that took 20 per cent off the value of the company. The shares traded at $3.84 after the meeting.

– Greg Bright