A Loan Voice In Boca Raton Seeks Action

The Age

Wednesday December 31, 2008

By ERIC JOHNSTON

FEW expected the shock waves from ANZ's entanglement with Opes Prime to be felt as far as Boca Raton, Florida, but a specialist US securities law firm there has finalised a class action against the bank, in which it alleges that US investors were misled by management.

Among other things, the claim lodged in a New York court alleges that investors that bought US-listed shares in the bank between March 2007 and July this year were kept in the dark about risks associated with the bank's lending to Opes Prime.

At the heart of the claim is the sharp fall in ANZ's US-listed shares following the bank's warning in July that its second-half bad debt charges would blow out to $1.2 billion, mostly as a result of the impact of a range of bad corporate debts and its exposure to a series of credit protection trades.

According to the claim documents, ANZ's failure to come clean about its Opes Prime exposure caused some investors to buy ANZ common stock at "artificially inflated prices".

The action so far involves a single shareholder, Linda Levine. While others who may join the action are not yet known, documents filed by Ms Levine indicate the number could be in the thousands. But a decision by ANZ to delist its US shares from the New York Stock Exchange in mid-2007 could limit potential claimants.

An ANZ spokesman said that, while the bank might have suffered reputational damage from the Opes Prime affair, the actual hit to the bank's balance sheet was immaterial.

One legal observer yesterday noted that US securities class actions were often easier to launch than they were to sustain and many were eventually pulled if they could not generate enough support from legal funders or a big enough number of shareholders.

National Australia Bank has also been subject to a US investor class action linked to write-downs on its Homeside mortgage business, which it sold earlier this decade.

This was eventually thrown out by a New York court that concluded it had no jurisdiction over claims made on behalf of NAB ordinary shareholders.

In Australia there has been no shortage of shareholder class actions.

The biggest was the recent $136million payout to Aristocrat shareholders who claimed to have suffered loss as a result of the poker machine manufacturer allegedly overstating profits.