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Financial services provider IOOF (ASX: IFL) is facing its second class action over alleged corporate misconduct, this time from law firm Shine.
Shine Lawyers alleges shareholders suffered losses as a result of non-disclosure by IOOF as well as potentially misleading and deceptive conduct affecting purchasers of IOOF shares.
The allegations apply to a period between 1 March 2014 and 7 July 2015, with the allegations spilling into the public domain after a report in June 2015 by the Sydney Morning Herald.
After the claims went public, IOOF's share price experienced its largest ever single-day fall to that point, dropping 13.3 per cent to $1.42 per share.
The next month IOOF former managing director Chris Kelaher (pictured) appeared before a Senate hearing during which he admitted IOOF had not reported serious past allegations of insider trading and front running by IOOF's senior staff to ASIC.
The same questions were once again raised in the financial services Royal Commission in 2018, during which it was uncovered that IOOF subsidiary Questor had allegedly disadvantaged members of a super fund compared to private investors.
Kelaher eventually resigned from IOOF after the Australian Prudential Regulation Authority (APRA) commenced proceedings against the company in relation to its treatment of super fund members as disclosed in the Royal Commission. The APRA action was ultimately unsuccessful.
Shine's class action is unrelated to the claim bought by APRA.
The action, funded by Litigation Lending, comes after Shine completed investigations into IOOF's alleged corporate misconduct, which included obtaining a Federal Court order for IOOF to produce documents relevant to the alleged misconduct.
"IOOF shareholders have repeatedly seen the value of their shares wiped out by numerous alleged failures of IOOF's management over several years," says Shine class actions practice leader Craig Allsopp.
"To date, these shareholders have not been able to recover any of their losses. I'm glad pursuing a solution to the many people affected by IOOF's alleged misconduct."
CEO of Litigation Lending Stuart Price has welcomed Shine's class action.
"The Financial Services Royal Commission and other enquiries have revealed extensive wrongdoing within the financial services sector," says Price.
"Class actions like the IOOF class action require the management of financial services companies such as IOOF to account for alleged failures and promote good corporate governance within the sector."
The class action is open to shareholder who purchased shares in the period from 1 March 2014 to 7 July 2015.
Shine's class action is the second to be launched against IOOF following in Quinn Emanuel Urqhart & Sullivan's (Quinn Emanuel) footsteps who launched a similar action in April 2019.
Quinn Emanuel alleged 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.
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