KEY POINTS:
A law firm specialising in leaky home cases is switching its attention to helping victims of failed investment schemes take group legal action.
Grimshaw & Co has invited those who've lost money in collapses such as Hanover, Bridgecorp and Blue Chip to attend a seminar at Auckland's SkyCity
Convention Centre tomorrow afternoon.
The aim is to look at their chances of suing the advisers and professionals responsible for putting them into the investments.
Partner Gareth Lewis said it was also an opportunity to co-ordinate groups of investors. "[Cases] can be run far more efficiently and effectively when people band together in a group," he said. "We believe ... we can run claims for victims of the financial [and] property collapses just as well as we have for the leaky homes cases."
A range of professionals are in the lawyers' sights, from financial advisers and solicitors, to valuers, auditors and corporate trustees.
Lewis said requirements on financial advisers were only tightened early this year, so most investors would be covered by the old law.
But regardless of the legislation financial advisers still owed a duty of care and could be liable for negligence.
Grimshaw & Co is joining a growing bandwagon of lawyers and burnt investors seeking to make professionals liable over the advice they gave.
Auckland law firm Ellis Law is preparing action against solicitors and valuers who handled investments in the failed Blue Chip property group.
A group of 45 former clients of financial advisory company Vestar is about to file proceedings against the firm.
They want to sue their former advisers, the directors and Vestar's investment committee for giving them poor advice and ploughing millions of dollars into finance companies which have since hit trouble.
Many were put into the same six finance companies - Bridgecorp, Capital + Merchant, OPI Pacific Finance, MFS Boston, St Laurence and Property Finance. Auckland barrister Lawrence Herzog said the common theme in the Vestar group was a lack of fundamental advice about risk and suitability.
"In some cases I've found that financial advisers have been recommending investments even when it's known to the general public that the investments are at risk," he said.
North Shore lawyer Andrew Hooker has reviewed the cases of around 160 investors who have lost money in finance companies, and believes at least half of them have grounds for taking action against their financial advisers.
"The scale of advice would go from sound to slightly questionable, to absolutely disgraceful. And there are a significant amount of people in my view at the absolutely disgraceful end."
Murray Weatherston, chairman of the Society of Independent Financial Advisers, doubted group actions were possible because each investor's situation was different.
He said it was dangerous for lawyers to stand up and offer cost-effective help.
"In terms of there being an easy way for [investors] to get recompense ... I think it's actually quite misleading."
Lyn McMorran, president of the Institute of Financial Advisers, said the problem was the current lack of regulation of financial advisers - there were no minimum qualifications and no single supervisory body.
The IFA had a code of ethics and a complaints procedure, but there was nothing it could do about non-members.
SkyCity Seminar
* Grimshaw & Co is holding a seminar for aggrieved investors at 2pm tomorrow at the SkyCity Convention Centre.
* It joins a growing list of law firms investigating action against professionals who gave bad advice over finance companies and property investments.
