Holding ASX-listed corporate companies to account
Institutional investors who have suffered financial losses due to corporate wrongdoing now have a new ally against corporate bad behaviour.
Investor Claim Partner (ICP), a world-first shareholder claims advisory service was launched to act as a fiduciary adviser to institutional shareholders wanting to bring claims against ASX-listed companies for losses suffered as a result of Board or management wrongdoing, such as non-disclosure of material information or misleading and deceptive conduct.
The Sydney-based company is already targeting new claims against Sims Metal, Shine Lawyers and Spotless.
ICP is the brainchild of John Walker, who co-founded the $306M capped ASX-listed IMF Bentham (ASX:IMF), one of the world’s largest litigation funders.
ICP’s service will streamline the process for investigating, initiating and managing investor claims and seeking earlier settlements, reducing the time and cost involved and ensuring a greater share of any damages awarded goes to shareholders.
Walker, said the environment for shareholder claims in Australia had matured in recent years to the point where shareholders now had far more control over how their own claims were managed.
“The body of law around class actions and investor claims is more established, the issues are better understood and there are more funders willing to invest in shareholder claims,” Mr Walker said.
“Whether they know it or not, this puts shareholders in a much stronger position to determine the financial and other terms under which their claims proceed.
ICP estimates that in the past 15 years tens of billions of dollars of shareholder value has been lost as a result of ASX-listed companies breaching laws and ASX listing rules. Of these losses, as little as $1.3 billion has been recovered in legal claims brought by shareholders.
Breaches leading to shareholder losses have included inadequate or untimely disclosure of information that is material to a company’s share price, insider trading and misleading and deceptive conduct.
“In the early years of litigation funding claims were few, relatively untested and somewhat risky, so funders were justified in charging 30 to 35 per cent of any settlement on top of the 12 or so per cent for legal fees,” Mr Walker said.
“However those levels of fees are harder to justify today, when the legal environment for shareholder claims is more certain, defendants are more able and willing to settle earlier and there are more funders prepared to back claims.
“We see potential to facilitate more competitive pricing from litigation funders and law firms that our clients choose to work with. More importantly, we see greater scope for institutional shareholders with valid claims to negotiate directly with defendant companies and reach a settlement before any legal proceedings commence. That will almost invariably be a superior outcome for shareholders and the defendant company,” he said.