_Conflicted Fees and Investment Losses  (LICs and LITs) (1)

Investigation into potential claims by investors for losses suffered because of a recommendation by an advisor to invest in a Listed Investment Company or a Listed Investment Trust

Mayweathers Lawyers and William Roberts Lawyers, along with a litigation funder, are investigating potential claims by investors who may have suffered financial losses as a result of a recommendation by a financial planner or stock broker (Advisor) to invest funds in a Listed Investment Company (LIC) or a Listed Investment Trust (LIT) prior to 1 July 2020 (LIC or LIT Investors), including in circumstances where the Advisor was paid a fee for recommending the investment, commonly referred to as a stamping fee (or otherwise referred to in public offer documents as a broker or advisor fee) (Stamping Fee).

The potential claims may be pursued in the form of class actions or another form.

LIC or LIT investors are invited to indicate their interest by registering their details below.

Background

In a submission made by the Australian Securities & Investments Commission (ASIC) to the Treasury dated 20 February 2020, ASIC expressed concerns which include the following:

  1. Stamping Fees create an incentive for Advisors to put clients into LICs and LITs over other comparable products that do not pay Stamping Fees.
  2. The conflicts of interest arising from Stamping Fees are too great to be effectively managed and should be avoided.
  3. LIC or LIT Investors experience poorer outcomes relative to other investment opportunities for reasons including that LICs and LITs tend to underperform (in some cases materially) against relevant benchmarks and other comparable products. The opportunity cost of investing in many LICs and LITs is foregone profits (or the minimisation of losses).

ASIC reported that that in the 5 years to the end of 2019, advisers had earned over $186 million in stamping fees from more than $14 billion of initial capital that had been raised by LICs and LITs, excluding secondary capital raised in the form of secondary equity offers, entitlement rights and attached company options.

Potential Claim

Our investigation focuses on whether LIC or LIT Investors have suffered financial losses as a result of the conduct of their Advisors, and whether such conduct was in potential contravention of relevant sections of the Corporations Act 2001 (Cth), including those concerning best interest duties and duties to avoid conflict.

It is anticipated that the potential claim would seek compensation for any direct, indirect or consequential financial losses incurred by a LIC or LIT Investor, including a refund or retribution for any Stamping Fees that were paid from the LIC or LIT Investor's funds to the Advisor, and opportunity cost.

LIC or LIT Investors may register their interest below. Registration is free and without obligation. Merely registering via this web page does not bind you to any contract or commitment, and also, does not create any solicitor-client relationship with any lawyers.

Please note that nothing on this web page represents an offer to participate in a Litigation Funding Scheme and is not a commitment by any person, including the lawyers, to fund or conduct an action or potential action in respect of the matters set out on this web page. There is no guarantee that the investigation will give rise to the prosecution of any claims. You should obtain independent legal advice concerning your rights and any personal claims that you may have in relation to matters referred to on this web page.

Our privacy policy applies to the information you provide via this registration. A copy of this privacy policy is available here.

If you have any questions you can contact Mayweathers by email on classactions@mayweathers.com.au or by calling 02 8020 5720 or us by calling 02 9552 2111.

Please register your interest on Mayweathers’ web page at https://www.mayweathers.com.au/investment-losses.html