Storm Financial settlement to cost Macquarie $82.5m
Macquarie Group has struck a deal with close to 1000 investors who lost their savings in the collapse of Storm Financial, reaching an $82.5 million settlement.
The investment bank has faced a class action over its role selling margin loans to the group of Storm investors, who say they lost up to $290 million in the financial adviser’s collapse.
On Friday, the parties reached a deal that effectively ends the financial cost of the Storm affair for Macquarie. It remains in a legal dispute with one investor and is facing a separate action from the corporate watchdog that is not expected to produce any financial costs.
A lawyer representing the investors, Stewart Levitt, said the case was significant because it was the first settlement with a Storm margin lender to involve legal proceedings.
Commonwealth Bank is also facing legal action over its role in Storm, which collapsed in 2009 after advising many clients to borrow against their homes and invest in the sharemarket.
The bank last year reached a deal with the Australian Securities and Investments Commission under which it agreed to provide $270 million to Storm customers.
But Mr Levitt, who is also leading a class action against Commonwealth Bank, argued the Macquarie settlement would put pressure on CBA. ‘‘This is the only settlement that’s resulted from legal proceedings. The other offers that came from CBA came from deals done behind closed doors between ASIC and the CBA.’’
The bank said it would defend the class action, which was misconceived as it was not responsible for advice provided by Storm.
Mr Levitt is also planning class actions against Westpac and Bank of Queensland over their roles lending to Storm investors.