ASIC will embark on the second phase of its Westpoint compensation case with the regulator seeking more than $24 million in damages from an Australian financial services licensee and a trustee.
The regulator will begin proceedings against Strategic Joint Partners Pty Ltd and State Trustees Limited in the first quarter of 2008.
The proceedings seek about $6.5 million in damages from Strategic Joint Partners, based on the amounts that their clients invested in Westpoint products and subsequently lost when Westpoint collapsed.
As with the initial actions against financial services licensees, ASIC will allege that, in selling products with the risk and financial characteristics of Westpoint, Strategic Joint Partners did not comply with its obligations under the conditions of its Australian financial services licence and under the law.
ASIC expects the total amount of damages claimed from State Trustees to be about $17.9 million.
ASIC will allege that State Trustees, as the trustee of an unsecured mezzanine note issue by Market Street Mezzanine Ltd (in liquidation), breached its duty to the mezzanine note holders and failed to comply with its obligations under the Corporations Act.
The regulator is working with liquidator Brighton Hall Securities, to assist with recovering the damages.
The first phase proceedings announced in November identified an initial five Australian financial services licensees and approximately $63.2 million in damages.
ASIC has now commenced proceedings against Masu Financial Management Pty Ltd, Bongiorno Financial Advisers (Aust) Ltd and Professional Investment Services Pty Ltd, three of the licensees named as part of ASIC's Phase One proceedings.
ASIC expects to file action against Glenhurst Corporation and Dukes Financial Services in the new year. The regulator will make further announcements regarding this matter in February.
