$82.5 million settlement reached in Storm Financial case
MACQUARIE Bank has reached an $82.5 million settlement with investors who took out margin loans to buy indexed funds in Storm Financial.
Lawyers for both sides are now asking a Federal Court judge to sanction the compromise which came after complex negotiations and lengthy mediation.
The Storm investors have pursued compensation from the bank since they began funding legal action in 2010.
They, and the Australian Securities and Investments Commission, alleged the bank engaged in "unconscionable conduct" for approving large loans and breaching loan contracts.
Many investors lost everything when Storm Financial collapsed just after the stock market crashed in 2008.
There is also legal action against Commonwealth Bank, Bank of Queensland and Westpac through the court system.
Douglas Campbell, counsel for the class action, told the Brisbane court the settlement with Macquarie would not exclude class action members from pursuing compensation from the other banks involved.
He said group members had been involved in the confidential mediation.
Mr Campbell said the settlement was "hard-fought" after a "long and complex litigation".
John Sheahan, counsel for Macquarie, described the figure as "a substantial amount".
"It's not the full amount if the claims were successful but that wouldn't be a compromise," he said.
Mr Sheahan said it would be unfair to compare the figure to the Commonwealth Bank settlement, which in total has added up to $268 million, because they were "apples and oranges".
He said the CBA was involved with Storm "on every level" and operated four of the managed funds.
Mr Sheahan said Macquarie was purely a margin lender and was operating on "a more detached level".
He said this settlement should relieve his clients from any other compensation liability under ASIC litigation still afoot.
Justice John Logan, who must make the decision, said he was concerned that members who contributed less legal funding to the class action model would get less when they simply lost so much money in the Storm "catastrophe" that they could not contribute.
He said there was also a concern that many who feared throwing good money after bad with a risky chance of getting any money at all would miss out all together.
The hearing continues.