Stockbroking firm Bell Potter Securities (Bell Potter) is set to face a $17.5 million class action for recommending its clients buy stock in a share offer the firm was partly underwriting.
At last count, 35 former Bell Potter clients from one Sydney broker had joined the Slater & Gordon class action.
The clients were told to buy shares in the Brisbane-based biotech company Progen Pharmaceuticals (PGL).
"It will be alleged that Bell Potter failed to appropriately disclose its position of conflict with its clients as underwriter and that the stock was recommended to and acquired by the affected clients at a higher price than it was fairly worth," a statement from Slater & Gordon said.
Up to 120 Bell Potter retail clients purchased some $28 million of PGL stock.
"Bell Potter used national marketing, including online reports, to attract investors into a stock from which it would receive a direct commercial benefit following a successful capital raising," Slater & Gordon practice group leader Van Moulis said.
"It will be alleged Bell Potter failed to disclose this clear conflict to its clients and potential investors."
Slater & Gordon expects to lodge a statement of claim against Bell Potter in the Federal Court of Australia within three weeks.
