ASIC has obtained court approval of a $1 million settlement for clients who invested in certain Westpoint products on the advice of Barzen Pty Ltd (formerly Dukes Financial Services Pty Ltd) and Mr Joseph Dukes (collectively Dukes).

The settlement is the sixth approved by the Federal Court arising out of ASIC’s Westpoint compensation proceedings. These settlements, together with the Dukes settlement, will benefit almost 1000 eligible Westpoint investors and take the total amount obtained by ASIC to approximately $25.5 million.

In April 2008, ASIC initiated class actions against Dukes to seek compensation for clients who invested in certain financial products issued by various companies within the failed Westpoint Group on the advice of Dukes (or its representatives). The claim alleged that Dukes negligently advised Group Members to invest in certain Westpoint products and engaged in misleading and deceptive conduct.

The settlement was reached without any admission of liability by Dukes.

Dukes must pay the approved settlement which will then be distributed to eligible group members by ASIC. It is anticipated that 70 per cent of the settlement will be distributed to eligible group members in early March 2011. The balance is expected to be distributed in late December 2011.

The settlement is now binding upon Group Members.

Today’s settlement reflects ASIC’s first priority which is focused on assisting and protecting retail investors, including seeking compensation, when appropriate, under section 50 of the ASIC Act.

Background

The investors in Westpoint-related financial products had an outstanding total capital invested of $388 million as at January 2006 when the Group collapsed. Since November 2007, ASIC has launched 19 civil actions seeking to recover funds for investors in the majority of the Westpoint companies, including:

• a claim against KPMG, the former auditors of the Westpoint Group
• claims against the directors of nine Westpoint mezzanine companies and various entities associated with a director
• claims against seven financial planners
• a claim against State Trustees Limited.

To date, ASIC has successfully settled claims against: Masu Financial Management Pty Ltd; [This media release was amended on 4 March 2020 in accordance with ASIC policy - see INFO 152 Public comment on ASIC's regulatory activities.] Bongiorno Financial Advisers Pty Ltd and Bongiorno Financial Advisers (Aust) Ltd ($2.6 million); State Trustees Ltd ($13.5 million) and Glenhurst Corporation Pty Ltd ($2.5 million).

Proceedings are still on foot in relation to directors, auditors and two Australian Financial Service licensees. ASIC remains hopeful that these proceedings will result in further compensation for Westpoint investors.