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19-057MR Final class action against financial services licensee recommending Westpoint products concludes
The last of ASIC’s proceedings seeking damages on behalf of a number of investors in the Westpoint Group has been finalised.
Nearly $1.5 million has been returned to 201 former Westpoint investors who were members of a claim (Group Members) brought by ASIC against Brighton Hall Securities Pty Ltd (in liquidation) ACN 096 576 868 (Brighton Hall Securities).
On 7 March 2019, the Federal Court in Perth dismissed proceedings brought by ASIC against Brighton Hall Securities seeking damages on behalf of a number of clients of Brighton Hall Securities after the company’s liquidator completed the distribution of entitlements arising from claims against the insurance money recovered by the liquidator under section 562 of the Corporations Act.
The final dividend represented a return of 22.35 cents in the dollar on the Group Members claims for $6,652,702.
This action was one of 19 civil actions brought by ASIC to recover funds for the benefit of Westpoint investors against Westpoint-related companies and their officers, the Westpoint auditor and financial services licensees whose advisers recommended Westpoint products.
In all, investors received a return of around $160 to $170 million of the $388 million in losses incurred, made up of approximately $78.5 million in recoveries from the liquidation process and Westpoint companies not in liquidation and nearly $93 million compensation from ASIC’s actions.
The Westpoint Corporation operated a property-related investment scheme that collapsed in late 2005, owing 3000 to 4000 investors $388 million. Most of the money raised for the various property development schemes in the Westpoint group came from the issue of unsecured promissory notes, promising investors returns of up to 12 per cent per annum.
Brighton Hall Securities carried on a financial services business from Applecross and South Perth in Western Australia prior to entering into liquidation in September 2007.
ASIC’s action was brought under section 50 of the ASIC Act, which allows ASIC to begin and carry on civil proceedings for damages for investors where it appears to ASIC that such proceedings are in the public interest.