ASIC class action set for May court date

Proceedings in a class action against the Australian Securities and Investments Commission over its involvement in the Storm Financial failure in 2008 have been held over after until May, to allow the plaintiffs to make Freedom of Information applications for ASIC files.

The parties attended a directions hearing in the Federal Court in Sydney last Wednesday, before Justice Lindsay Foster.

The class action, which was launched in December, is being run by Levitt Robinson, which is also representing plaintiffs in several other class actions arising from the Storm failure.

The case against ASIC is based on claims that, long before Storm went into administration in January 2009, ASIC officers were aware of "substantial risks" faced by Storm clients and that Storm's clients would not receive financial advice appropriate to their circumstances.

"ASIC failed to have regard to the investors, notwithstanding their duty to do so," according to the amended statement of claim.

The claimants also argue that ASIC has a policy of "improperly" preferring the interests of the Commonwealth Bank (and its wealth management subsidiary Colonial) ahead of consumer interests.

This policy resulted in a delay in taking action against Storm and a failure to investigate the bank's involvement in the matter.

According to the claim, if ASIC had exercised its powers "lawfully and in good faith" the plaintiffs and group members would have been made aware of the risks they faced much earlier and would have been in a position to take action.

The plaintiffs' decision to undertake an FOI process rather than the usual legal discovery process was based on a view that FOI would result in a wider investigation of ASIC files.