Firms facing court action linked to key adviser

Donal Curtin

A second financial advisory group that received investment advice from Commerce Commission member Donal Curtin is facing legal action over the investments it recommended.

Broadbase, which until midway through last year had 12 offices throughout the country, is facing a case in the High Court at New Plymouth and action against its insurers QBE in Christchurch from unhappy investors.

Curtin was the head of Broadbase's investment committee until July last year when he resigned from both Broadbase and the failed financial advisory group Vestar.

Curtin and former Vestar directors Kelvin Syms, Simon Purvis, Kenneth Swain, Andre Gaylard and Jason Maywald are also facing two separate legal suits, from Auckland and New Plymouth, involving hundreds of investors, over advice given through the Vestar network recommending people plough money into failed finance companies Bridgecorp, Capital & Merchant and Property Finance Securities.

In July last year Curtin was promoted to Deputy Commissioner but two months later the commission appointed Wellington QC Hugh Rennie to investigate whether he gave appropriate disclosure on his involvement with Vestar, its parent company MFS and fund management firm Mint Asset Management.

The investigation came after pressure from investor advocacy group EUFA (Exposing Unacceptable Financial Activities).

Rennie found Curtin's lack of disclosure was not intentional and that the Ministry of Economic Development was partly at fault for giving Curtin only "cursory scrutiny" when he was hired.

Curtin resigned from the deputy's role but remains a commissioner.

An initial hearing against Hamilton Steele, formerly Broadbase Egmont, and its insurers QBE was due to be held in the High Court at New Plymouth today but has been put on hold while the outcome of the Christchurch case is determined.

Karen Towt, a lawyer for New Plymouth law firm Dennis King Law, said the case was based on a claim of a lack of fiduciary duty towards her client and was similar to the Vestar case.

Earlier this year Towt took a test case against QBE on behalf of a Hamilton couple to try to get the insurance company to pay out the personal indemnity insurance for Vestar but it failed to proceed. Towt said the Broadbase case was similar but unlike Vestar the company was still operating.

The Christchurch case is being taken by law firm Wynn Williams & Co against QBE.

Towt said it had been adjourned.

"Our case is waiting for the determination of strike-out in Christchurch."

If the Christchurch case is struck out Towt said her case would continue but against the company alone.

The case does not involve Curtin and, until told by the Herald, Towt was not aware of the link between Vestar and Broadbase.

FACING LEGAL ACTION

Broadbase - a network of advisers which until last year managed $400 million worth of people's money. Many advisers have since left the network.

Vestar - former financial advisory group now in liquidation, managed up to $1 billion worth of people's money at its height. Invested in failed finance companies Bridgecorp, Capital & Merchant, Property Finance Securities, OPI Pacific Finance.

Commerce Commission member Donal Curtin headed up the investment committees of both Vestar and Broadbase.