A string of separate legal proceedings have become one major case as law firm Maurice Blackburn today launched a class action against Commonwealth Financial Planning in the Federal Court.
The firm is leading the class action on behalf of those investors who it says lost millions by relying on the recommendations of a CFPL financial planner, Don Nguyen.
A series of legal proceedings were filed against CFPL in March last year. Maurice Blackburn acted for seven individuals who lost of a combined total of $4.3 million as a result of advice given by Nguyen, the firm said.
Of the seven individuals, one couple lost $25 million and one self-managed super fund lost $1 million.
In March last year, Maurice Blackburn partner John Berrill said the investors allege they were required to sign blank financial needs analysis forms, which were filled in later.
"They were incorrectly categorised as aggressive investors and tier money was invested in high risk portfolios," Berril said.
There are many "stark similarities" among Nguyen’s former clients, according to the law firm. They are mainly retirees who chose CFPL because of its reputation. They suffered substantial losses or, in some cases, their entire life savings.
Nguyen was a financial planner employed by CFPL until July 2009.
Commenting today, Maurice Blackburn managing principal Ben Slade said he believes the problem is widespread.
“Those who have suffered such losses need experts working for them to help them to get the compensation they deserve. Since March last year, several former clients of CFPL have asked for our help. We understand that there are many other people out there who have lost a great deal of money and who CFPL may short change. These people need someone on their side and this class action will give them that.”
Maurice Blackburn alleges that CFPL breached various provisions of the Corporations Act, engaged in misleading or deceptive conduct and was negligent.
Maurice Blackburn has settled some matters on behalf of aggrieved investors but a number are still outstanding.
Elizabeth Saunders, a retired public servant is the lead applicant in the class action case. When she retired in 2007 she sought advice from Nguyen on the best way to secure an income stream for her savings.
It is alleged that Nguyen wrongly categorised Saunders as a growth investor and recommended that she invest her savings and her superannuation in investment portfolios that were inappropriate for her and carried excessive risk.
Saunders said: “When I asked Mr Nguyen for advice I had just retired and needed my money to support myself for the rest of my life. What I got was high risk without my knowledge. I worked hard and saved all my life and now I'm left in financial hardship because of this.”
The class action is brought on behalf of investors who, between 8 February 2005 and 28 February 2010, received investment advice from Nguyen of CFPL and who suffered losses by relying on this advice.