SYDNEY (Reuters) – Australia’s embattled second-largest wealth manager, IOOF Holdings Ltd, was sued on Friday by shareholders who alleged the company engaged in deceptive conduct and breached stock market disclosure obligations.
The class-action lawsuit is the ninth against a major financial firm since a public inquiry last year uncovered widespread misconduct in Australia’s financial system, including charging customers fees for no service and deception of regulators.
The suit was filed in the New South Wales Supreme Court in Sydney by law firm Quinn Emmanuel.
In a statement, the firm alleged management impropriety drew regulatory attention which hit the share price. It did not say what shareholders are asking for as compensation.
IOOF said in response it does not engage in misleading or deceptive conduct, the case is without foundation and it will mount a defense.
The wealth manager is contesting a move in December by the Australian Prudential Regulation Authority (APRA) to disqualify five top IOOF executives for failing to act in customers’ interests.
APRA said it had identified three occasions when units of IOOF had used money belonging to pension fund customers to compensate them for losses caused by the company.
IOOF said in December that the allegations were misconceived and that it would vigorously defend against them. It added that it had already addressed or was addressing APRA’s other concerns.
The regulator’s move followed IOOF’s appearance at the public inquiry, called a Royal Commission, and knocked 40 percent from the firm’s share price.
The stock has recouped most of those losses, though one of the executives, Managing Director and CEO Christopher Kelaher, will leave the company by “mutual agreement” in July amid a broader overhaul.
“The reckoning that began at the Royal Commission now goes to the next stage, with the filing of this class action,” Quinn Emmanuel partner Damian Scattini said in a statement.
Reporting by Tom Westbrook; Editing by Muralikumar Anantharaman