Investors in Ross Asset Management - New Zealand's largest ponzi scheme - are taking legal action against ANZ bank over how it managed the accounts for the failed financial advice firm.

But the bank says it was also misled by David Ross. It denies the allegations and will be defending the claims.

Wellington financier and former head of the Ross Asset Management David Ross was jailed for 10 years and 10 months in November 2013 after he defrauded more than 700 clients of $115.5 million.

Only about $10 million has ever been recovered.

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Ross pleaded guilty to eight charges, brought by the Serious Fraud Office and the Financial Management Authority, for his elaborate scheme which ran from 2000 to 2012.

Now a legal claim has been filed in the High Court at Wellington against the ANZ bank.

So far 200 investors have signed up to take the claim which could run into the tens of millions of dollars depending on how many more investors sign up.

The investors allege ANZ breached its duties as banker to Ross Asset Management for negligence in managing the Ross Asset Management bank accounts and for actions known as "knowing receipt" and "dishonest assistance".

John Strahl, a spokesman for the investor group, said the action was being taken on the back of investigative work done by the Financial Markets Authority into how the ANZ managed the bank accounts of Ross Asset Management prior to its collapse in late 2012.

"We are disappointed that the ANZ took legal action for over three years against the FMA to try and stop it from passing on the results of its investigation to investors. However, the FMA prevailed after being tied up for three years in the courts by ANZ through a Supreme Court ruling in favour of passing the information on to us.

"Such delays have simply prolonged the agony for RAM investors, many of whom have already psychologically written off their investment."

David Ross, former head of Ross Asset Management. Photo / File
David Ross, former head of Ross Asset Management. Photo / File

Strahl said since receiving the FMA's material it had sought its own independent analysis and legal advice.

"This confirms that we have a very good claim against ANZ and we are now proceeding with legal action."

He said the claim was based on its view that ANZ either knew that Ross was running his business as a Ponzi Scheme or it should have known how one of its large fund management clients was operating its accounts.

"The ANZ is one of the largest fund managers in New Zealand and Australia – they know how client funds are meant to be managed."

Strahl said by law Ross Asset Management was meant to be holding investor funds in a client account to be invested on behalf of the client who deposited the funds.

Instead, however, they claim ANZ did not require this and allowed the funds being deposited to be used for non-investment purposes, including paying RAM expenses, reducing RAM's unauthorised overdraft with ANZ and also to repay other investors.

"It is on this basis the FMA came to the view that ANZ may be liable to a claim from the RAM investors for participating in RAM's breaches of trust because of the way ANZ permitted the bank accounts of RAM to be operated,"

More than 200 investors have signed up to join the legal action and Strahl said he expected more to do the same in coming weeks.

"In our view all investors in RAM who at the conclusion of the liquidation had made a positive net contribution, will be eligible to join the claim."

The action is being supported by LPF Group, the largest New Zealand based litigation funder who specialises in funding representative actions and large commercial claims.

LPF will fund the costs of the claims on behalf of the investors and will take a fee if successful.

If the claims are unsuccessful LPF is required to pay the costs of the claims so investors should have no need to pay anything.

A spokeswoman for ANZ said: "ANZ was Ross Asset Management's banker and like the investors was misled by Mr Ross.

"ANZ strongly denies the allegations and will be defending the claim from the investors and the litigation funder."

NO FURTHER ACTION FROM FMA

In a statement the FMA said the filing of the proceedings marked the end of a long battle to enable the FMA to engage with investors so they could determine whether to bring a claim against ANZ.

Rob Everett, FMA chief executive, said the Ross Asset Management Ponzi scheme was a major event for New Zealand's financial markets and had a very significant impact on a large number of investors.

"For the past three years, the FMA has been responding to ANZ's legal challenge to enable us to engage with and provide relevant information to Ross Asset Management investors.

"We invested considerable time and resources in litigating this matter, which went all the way to the Supreme Court. The FMA established the right for investors to make their own informed decisions and pursue their own claim."

Everett said the matter raised important questions around bankers' duties.

"We are pleased they will now be tested in the Court."

But given Ross Asset Management investors had decided to take this action, there was no need for the FMA to determine whether to use its statutory powers to pursue an action on their behalf.

"While the FMA has the power to take action on behalf of investors, it is obliged to consider the likelihood of individuals taking their own proceedings and diligently pursuing them.

"This action shows the process is working, with investors exercising their private rights to make a claim," Everett said.

"It has taken a long time to get to this point, but we think that this is the right result."