Litigation firm Slater & Gordon has filed a class action suit against financial services firm Bell Potter Securities after attempts at an out-of-court settlement failed.
Slater & Gordon have begun class action proceedings against the listed advisory firm on behalf of more than 50 former clients who lost $22 million due to an alleged stock sale.
As part of the action filed in the Federal Court, clients claim they lost the funds after Bell Potter representatives encouraged them to buy shares in the Brisbane-based biotech company Progen Pharmaceuticals (Progen) in 2007.
Slater & Gordon Practice Group leader Van Moulis said the decision to proceed with a class action came after negotiations between both parties stalled.
"We invited Bell Potter to generally engage in possible settlement negotiations as soon as we served the statement of claim and that was back in October," Moulis said.
"There was an initial interest but then the lawyer for Bell Porter became aggressive and has foreshadowed a number of applications designed to contest the proceedings."
Moulis said the clients involved in the class action are predominately based on Australia's eastern seaboard, though he expects interest from investors based in Western Australia.
"I expect there to be interest from investors in Western Australia because we understand this conduct and the promotion of the purchase of the shares was done more vigorously in the Perth office of Bell Potter," he said.
"It was aggressive in the offices on the eastern seaboard but we expect there will be greater interest to come out of Western Australia in particular."
A Bell Potter spokesperson said the firm had no comment to make regarding the class action.
In April last year, Slater & Gordon mounted proceedings against Bell Potter over claims it recommended clients buy Progen stock in an offer the firm was partly underwriting.
The class action is being supported by litigation funding firm, Litigation Lending Services.
The matter is due back in court on 17 January 2011.
