Lawyers Weekly 29 November, 2010
Slater & Gordon has this week filed a claim against Southern Cross Equities on behalf of a couple who lost a portfolio worth more than $25 million during the collapse of Opes Prime.
Filed in the Federal Court of Australia, the claim alleges that Southern Cross Equities failed to properly advise New Zealander John McIntyre (and his now deceased wife Elizabeth) as to the true nature of a securities lending facility with Opes Prime.
Slater & Gordon practice group leader Mark Walter said it is alleged that the McIntyres were not advised of the true nature and high risks associated with the Opes Prime facility.
"The McIntyres had engaged Southern Cross Equities as stockbrokers and advisers as they mainly invested in shares in mining and energy companies," Walter said.
"In April 2005, Southern Cross Equities advised the McIntyres to enter into a margin lending facility with Opes Prime Securities Limited, allowing them to borrow to invest further using their shares as security. In fact, what they entered into was not a standard margin lending facility but a far more risky and dangerous share lending arrangement."
The claim alleges that when Opes Prime collapsed in March 2008, the McIntyre's portfolio had a market value of $25.5 million with a loan owed to Opes Prime of $8.4 million.
"However, Opes Prime had already transferred the shares to a third party meaning that when Opes Prime went into administration, the McIntyres lost their entire share portfolio, including equity of approximately $17 million," Walter explained.
"The McIntyres allege that Southern Cross Equities were negligent costing them millions [of dollars] in equity plus many more millions in potential earnings."