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A group of investors in Ross Asset Management sued ANZ Bank for allowing the bankrupt investment company to operate illegally.
Photo: RNZ / Claire Eastham-Farrelly
The group says the bank knew or ought to have known that Wellington's financial adviser in Wellington, David Ross, operated a Ponzi scheme.
His business collapsed in 2012 and he was sentenced to 10 years and 10 months in prison after confessing the fraud, which resulted in an overestimation of his clients' funds of $ 380 million. We owed $ 115 million to about 700 investors, and the liquidators took steps to recover the money from investors who came out early with significant gains.
In April, the Supreme Court dismissed ANZ 's action to prevent the Financial Markets Authority (AMF) from investigating bankruptcy by forwarding information to investors.
"Since we received the FMA documents, we have been seeking our own independent badysis and legal advice, which confirms that we have a very good complaint against ANZ and are now taking legal action," said the door. -speaker of the group, John Strahl.
The collapse of Ross Asset Management (RAM) was one of the largest in the fund management industry. It worked like a Ponzi scheme, in which new investor funds were used to pay other investors, instead of being properly invested.
The group of investors said that ANZ should have known that Ross was acting illegally by not holding client funds in separate accounts, as required by law.
"The ANZ does not need it and has authorized the use of funds on deposit for purposes other than investment, including to pay RAM fees, reduce the unauthorized overdraft of RAM with ANZ and repay other investors, "said the group.
The FMA investigation concluded that ANZ Bank could be sued by investors.
FMA CEO Rob Everett said he has done his job by allowing investors to take legal action.
"This case raises important issues regarding bankers' obligations and we are delighted that they are now being tested in court."
The action is funded by a firm specializing in clbad actions, LPF Group, on the basis of no gain, no cost.
The group said that more than 200 people have registered for action.
In a statement, ANZ stated that the latter had also been misled by Ross.
A spokesman said the bank had strongly denied the charges and would defend the investor claim.
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