Court rejects ANZ bid to have case thrown out

A New Zealand court has rejected an application by ANZ to throw out a $NZ80m ($75m) claim against the bank.

A man walks past an ANZ bank sign in Melbourne's Chinatown on April 30, 2020. Picture: AFP

A New Zealand court has rejected an application by ANZ to throw out a $NZ80m ($75m) claim against the bank by 550 local investors in a Ponzi scheme.

The investors allege they lost $NZ115m to Ross Asset Management and have mounted a negligence claim against the country’s largest bank.

They claim the bank either knew or should have known that Wellington financial adviser David Ross was operating New Zealand’s biggest Ponzi scheme, which collapsed in 2013.

Ross, who was an ANZ client for 20 years, was reportedly released from prison in March, having been granted parole after serving six years of his nearly 11-year sentence for fraud.

Investors allege the bank knew Ross’s accounts were being operated suspiciously, using money from clients’ investment accounts to pay back debt into another account at least 100 times.

The investors’ lawyer, Justin Smith, told the High Court ANZ knew money from the client account was to be held for client purposes only. The bank, he said, should have acted when it saw the money was being used for other purposes.

“Now we have these clients of RAM paying RAM’s rent — $NZ7900, bank fees again, wages again, paying for the BMW again, again RAM’s rent — $NZ9400, Mr and Mrs Ross get $NZ881 ... somebody’s credit cards get paid,” Mr Smith said.

“We are alleging that the bank knew Mr Ross or his company held money on trust for beneficiaries and that he was spending it on things that had precisely nothing to do with anything for which those funds were held on trust [for] and that the bank knew it.”

ANZ says in its defence that it was misled by Ross, too.

The class action is being funded by a New Zealand-based litigation group.