KEY POINTS:
ANZ Banking Group chairman Charles Goode and chief executive Mike Smith have been accused in court papers of making false statements about the Opes Prime saga to inflate the bank's share price.
Florida-based securities litigation firm Vianale & Vianale have launched a class action in the United States,
alleging violations of the US Securities Exchange Act by Goode, Smith and ANZ's chief financial officer Peter Marriott, and non-executive director and chairman of the governance committee, Ian Macfarlane.
ANZ maintains the class action - which has not yet said how much damages it is seeking - is without foundation and will be vigorously defended.
The complaint pleads two counts involving employing a scheme to defraud investors and making false and misleading statements on at least 11 occasions since March 2, 2007, over ANZ's business, finances and operations. This included details in trading updates, market guidance statements and on significant events regarding loan impairments, Vianale alleges in the complaint lodged in the US.
"Each [defendant] exercised their power and influence to cause ANZ to engage in the fraudulent practices complained of herein," Vinale's complaint says. "In March 2007, in a series of internal emails, executives of ANZ recognised that Opes was in financial difficulties and that as a result, ANZ's loans to Opes Prime would be in jeopardy. Nevertheless, no public disclosure was made by ANZ."
The complaint also alleges Smith failed to discuss the bank's exposure to Opes Prime on a trading update conference call on February 17, 2008 during which he discussed ANZ's exposure to certain risk loss.
This made his statements false and misleading, Vianale alleges.
Eleven days later ANZ announced that any loss from Opes was unlikely to be material.
"Defendants knew and/or recklessly disregarded the falsity and misleading nature of the information which they caused to be disseminated to the investing public," the complaint says. "The individual defendants engaged in such a scheme to inflate the price of ANZ common stock in order to protect and enhance their executive positions and the substantial compensation and prestige they obtained thereby; and enhance the value of their personal holdings of ANZ common stock and options."
The law firm launched the action on behalf of purchasers of ANZ's American Depositary Receipts (ADRs) - negotiable US securities representing a non-US company's publicly traded equity - traded from March 2, 2007 to July 27, 2008.
The complaint was brought by Linda Levine and "all others similarly situated".
The law firm claims that all purchasers of ANZ ADRs - trading through the Bank of New York Mellon - during the class period "suffered similar injury" through their purchase of stock at artificially inflated prices.
Vianale & Vianale say that on July 27, the day before ANZ announced its exposure to Opes Prime, the bank's ADRs closed at a high of US$17.24.
"The following day, after ANZ's announcement, ANZ's stock price dropped to US$14.57," the law firm said.
"Plaintiffs have not specified total class-wide damages yet; that will be an issue for expert opinion later in the action," the law firm's principal, Kenneth Vinale said.
Proceedings in the New York federal court will begin in two months.
Opes Prime, which specialised in the borrowing and lending of securities, collapsed on March 27 after cash and stock movement irregularities were uncovered in a small number of accounts. The plaintiffs in the class action launched on Monday will join a queue of legal actions taken against the bank over Opes Prime, including a A$100 million class action taken by law firm Slater & Gordon last May on behalf of Opes' former clients.
- AAP