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Class action launched against collapsed investment fund for ‘gut-wrenching’ losses
Plaintiff firm Slater and Gordon has commenced proceedings against IPO Wealth Fund, which was pitched to consumers as a “term deposit alternative”.
Jerome Doraisamy
Slaters has filed a class action in relation to the allegedly misleading marketing of collapsed investment fund, IPO Wealth Fund (Fund). It is being brought against the trustee of the Fund, Vasco Investment Managers Limited, and DH Flinders Pty Ltd, the Australian financial services licensee who was responsible for the conduct of its authorised representative, IPO Wealth Pty Ltd (the company that issued the Fund’s promotional material to members of the public).
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Between April 2017 and March 2020, the firm said in a statement, the trustee advanced some $86 million in funds raised from investors.
It is anticipated, it continued, that a “substantial amount will not be able to be recouped by the liquidators independently working to liquidate the Fund’s assets”.
“The most recent liquidator’s report to creditors noted that the majority of the investments were generally illiquid in nature,” it noted.
According to Slaters practice group leader Emma Pelka-Caven (pictured), the Fund was “directly marketed” to members of the public as being similar to a term deposit, with stories emerging from group members being “gut-wrenching”.
“The Fund’s marketing and information memoranda represented that unit holders were investing in a product with limited risks and where the targeted rates of return were readily achievable. Instead, unit holders were sold a risky, illiquid and speculative investment,” Ms Pelka-Caven said.
“Some of our group members have lost everything they have.”
One investor, Allen Anderson, said: “The cowboys working for IPO Wealth clearly targeted people’s retirement savings and used a loophole in the law to treat us as sophisticated investors; we were led to believe that this was similar to a term deposit.”
“They at no stage let us know how risky the investment strategy was. Coupled with that was the appalling performance of Vasco as trustee who clearly fell asleep at the wheel while our funds disappeared without account,” he said.
Similarly, investor Gary Pearson said he had invested his life savings into the Fund after searching for term deposits online.
“That money that we had invested and lost was intended to go towards our three children and potentially to buy a small one-bedroom unit for each of them for their future, to give them a much better financial start to their life than I had. But all that is gone now,” he detailed.
“It was all at the expense of ruining people’s future and their children’s future.”
The class action has been filed in the Federal Court and will be conducted on a “No Win-No Fee” basis. Group members, Slaters said, “will not be exposed to any out of pocket costs as a result of their participation in the claim”.
