Settlement spread unfair, says ASIC

THE settlement will see Macquarie Bank pay $82.5m.

The corporate watchdog is appealing against the recent $82.5 million class action settlement between former Storm Financial clients and Macquarie Bank, alleging the distribution of the money is unfair.

The Australian Securities & Investments Commission has expressed concern about the fairness of the recent decision of the Federal Court of Australia to approve the settlement of the class action, brought against the bank by Sydney law firm Levitt Robinson, regarding the claims of 1050 Storm clients who took out margin loans with the bank.

The settlement will see Macquarie Bank pay $82.5m, including legal and administrative costs.

ASIC says, according to Levitt Robinson estimates, about 315 investors who funded the class action will be reimbursed their legal costs and also compensated for approximately 42 per cent of their losses, while about 735 Macquarie borrowers will only get back about 18 per cent of their losses.

ASIC's appeal will centre on its claim that the distribution of the money is not in proportion to losses suffered and has also expressed concern that a funders' premium for class action members who funded the action amounts to an unfair advantage for those members at the expense of the remaining 70 per cent of class action members.

The watchdog also alleges inadequate notice was given to class action members of the prospect of payment of a funders' premium.

ASIC deputy chairman Peter Kell said: "Settlement of a class action should be undertaken in the interests of the class action group as a whole. ASIC's appeal raises the question whether this settlement was unfair to the 70 per cent of class action members who did not, or were unable to, contribute to the funding of the action."