Slater & Gordon (S&G) is investigating the possibility of taking legal action against financial advisers who placed their clients' money in multi-manager funds that invested in Basis Capital (BC) products.
"I think people and organisations have invested through means where it is not immediately clear that they have been put into Basis funds because it has formed a part of a wider group of investments," S&G lawyer Mark Walter said.
The advisers who recommended multi-manager products that included BC funds may have breached the Corporations Act, obligations under contract and been negligent, Walter said.
"My view is that reasonably the prudent financial planner would investigate all the funds making up a group fund. A lot of investors may be unaware that a lot of losses they have suffered actually relate to recommendations to invest in a fund that includes Basis," he said.
"I think that's why this has perhaps for some investors flown under the radar and why it's worth examining the makeup of their losses generally."
S&G has already received inquiries about pursuing claims against advisers who recommended multi-manager funds that included BC funds, but would not initiate legal action till investigations are complete, Walter said.
He also said the law firm is continuing its investigations and legal action against advisers who recommended the Basis Yield Fund to investors.
S&G was pursuing a number of advisers, from a number of unnamed smaller advisory businesses to large financial institutions on behalf of their former clients, he said.
"Retail investors were amongst the hardest hit by the collapse of the Basis Yield Fund, because financial advisers around Australia had been recommending the fund as a product that was safe and suitable for these types of investors," Walter said.
He said the fund's product disclosure statements should have "raised alarm bells" for advisers researching the fund with a view to recommend it to clients.
"The product disclosure statements issued by Basis outlined the high level of risk and the fact that its funds were trading in a number of exotic financial products, including derivatives, collaterised debt obligations and global residential mortgage backed securities, he said.
Up to 700 Australian investors were estimated to have been affected by the collapse of the Basis Yield Fund in 2007, with the combined loss of capital estimated to exceed $300 million, Walter said.
