Levitt Robinson has issued a letter to the Macquarie Bank CEO that foreshadows its intention to include the bank in its ongoing Storm Financial class action.
In a "letter Before Suit" that was hand delivered to Macquarie Bank (MBL) CEO Wallace Sheppard on 24 November, Levitt Robinson principal Stewart Levitt claimed that each of his firm's clients have suffered significant losses as a result of the closing-out of margin loans, and that its clients consider Macquarie to be "responsible for them having incurred those losses".
"Each of our clients considers that MBL is therefore liable to them in damages for breach of contract, and further, arising from their conflict of interest in preferring the interests of Storm to the interests of their Storm-referred customers inter alia, for unconscionable conduct," Levitt wrote in the letter to Sheppard.
Levitt told Lawyers Weekly that his firm hopes to have initiated formal legal proceedings against Macquarie by the end of the year, and that his firm's class action might be expanded further.
"We have legal teams working on MBL, CBA, the closure of the fund, in particular whether it breaches s601 of the Corporations Act, and I am preparing a class action against the Bank of Queensland (BoQ)," he said.
The Levitt Robinson missive to the CEO of Macquarie Bank came two days before the Australian Securities and Investments Commission (ASIC) announced its intention to take legal action against Macquarie.
ASIC announced it would also commence legal proceedings against the CBA and BoQ, in addition to bringing civil penalty proceedings against Storm directors Emmanuel and Julie Cassimatis. ASIC has alleged that both Macquarie and the Bank of Queensland breached contract clauses, engaged in unconscionable conduct and have liability as linked credit providers of Storm under section 73 of the Trade Practices Act.
ASIC has also alleged that the CBA, BoQ and MBL participated in a managed investment scheme with regard to the Storm Model, and were required to be registered under the Corporations Act, something which they did not do.
ASIC has allowed a maximum three week period before it formally files compensation proceedings, to facilitate settlement of this issue.
While Levitt believes ASIC is taking a "softly softly" approach to the matter, he said that the statement by the regulator demonstrates that the resolution scheme negotiated by the CBA and Slater & Gordon in February fell way short of the mark.
"I have been totally vindicated [in instigating a separate class action]," Levitt said. "Slater & Gordon have been rubbishing my action, saying that our whole approach is flawed and that Storm investors should have no confidence in us.
"It is quite flattering that a firm with 750 lawyers would take the time to attack a firm with one principal and nine solicitors."
Levitt said that he would be meeting representatives from ASIC this week and federal parliamentarians in the near future to lobby for increased safeguards with regards to shareholder interests when companies collapse.