By Chris Barrett
Gold Coast-based financial planning giant Professional Investment Services has been ordered to pay $5.9 million to clients it advised to invest in the failed Westpoint Group companies.
The Australian Securities and Investment Commission had alleged in a class action that PIS was negligent in its provision of advice to investors and breached its Australian financial services licence.
Of the $393 million investor capital tied up in Westpoint at the time of its collapse in January 2006, $19 million was from the pockets of PIS customers.
The Federal Court today approved a settlement of $5,945,176 to be distributed equally between eligible investors based on the capital they invested, meaning they each will receive 62.5 per cent of what they put in.
PIS, Australia's largest financial planning group, has until November 30 to pay the sum of the settlement, which will be distributed upon the completion of the Federal Court appeal period on December 14, or after an appeal if one is lodged.
The firm's chief executive officer, Robbie Bennetts, and managing director, Grahame Evans, were unavailable for comment but the firm has at no stage admitted any liability.
PIS was one of seven Australian financial planners that ASIC launched legal action against in the wake of the Westpoint collapse.
It also launched proceedings against accounting group KPMG, the directors of nine Westpoint mezzanine companies including the founder Norm Carey, and State Trustees Limited.
The PIS settlement is the first since ASIC began "global mediation" to seek compensation from those companies and individuals.