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Just under a month after announcing its intention to file a class action law suit against financial advice firm IOOF (ASX: IFL) Quinn Emanuel Urqhart & Sullivan (Quinn Emanuel) has filed the proceedings in the Supreme Court.
The class action is part of the industry-wide fallout from the Royal Commission into the banking and finance sector, and sees Quinn Emanuel alleging that IOOF breached its duties.
The law firm alleges that IOOF's conduct breached its continuous disclosure obligations under the Corporations Act, ASX listing rules, and engaged in misleading or deceptive conduct, which resulted in shareholder paying an inflated price for shares in the financial services business.
"Management at IOOF must have known that its conduct was risky legally and reputationally," says Quinn Emanuel partner Damian Scattini.
"Yet they persisted, and the board let it pass. The reckoning that began at the Royal Commission now goes to the next stage, with the filling of this class action."
In December 2018 following the uncovering of evidence against IOOF during the royal commission the Australian Prudential Regulation Authority (APRA) launched legal proceedings against company directors to disqualify those directors from acting as superannuation trustees.
Investors saw the value of their shares dwindle from highs of $11.44 per share in October 2017 to as low as $4.50 after the APRA started disqualification proceedings against IOOF.
The APRA action has targeted former managing director Chris Kelaher and former chairperson George Venardos, as well as others. Renato Mota stepped in as acting CEO while Kelaher and Venardos stepped away to focus on defending the APRA proceedings.
Despite the Royal Commission identifying serious failings in the industry and giving IOOF "cause for reflection", Mota highlighted a solid financial result for the first half with profit up 200 per cent to $135.4 million.
He said the result was augmented by the ANZ Wealth Management Aligned Dealer Group acquisition. However, APRA's action against IOOF representatives did put a spanner in the works for the $975 million purchase of the bank's OnePath Pensions and Investments business.
Earlier this week IOOF announced that its subsidiary Bridges Financial Services Group is set to acquire Bendigo and Adelaide Bank's financial planning client book and servicing rights.
Under the $3 million deal IOOF would provide ongoing financial planning services to clients of Bendigo referred to Bridges via an exclusive referral arrangement.
"This partnership demonstrates how our diversified service capabilities continue to be attractive to advice groups looking to join a genuinely advice-led wealth manager," said Mota.
"It is testament to our focus on our long-term vision and making advice more accessible to all Australians and we are pleased to deepen our partnership with an iconic community centric organisation."
Shares in IOOF are up 2.65 per cent to $6.59 per share at 4.11pm AEST.
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