Investors in the failed Ross Asset Management scheme have been told they have a "serious claim" against the ANZ which could run as high as $50 million, depending on how many sign up.
Earlier this month investors in RAM - New Zealand's largest ponzi scheme - filed legal action against New Zealand's largest bank over how it managed the accounts for the failed firm.
They allege ANZ breached its duties as banker to RAM for negligence in managing the Ross Asset Management bank accounts and for actions known as "knowing receipt" and "dishonest assistance".
The ANZ has said it was also misled by David Ross - the former head of the failed investment firm.
A spokeswoman for the bank said it denied the allegations and would be defending the claims.
The FMA said the matter raised important questions around bankers' duties and this provides the opportunity for them to be tested in court.
Wellington financier Ross was jailed for 10 years and 10 months in November 2013 after he defrauded more than 700 clients of $115.5m.
Only about $10m has ever been recovered.
Now more details of the legal action can be revealed.
In a letter to RAM investors via liquidator PwC John Strahl, chairman of the investors' committee, said not all investors in RAM could join the claim.
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The first group that could included those who invested new money with RAM after the date from which it alleges ANZ should have known that the RAM bank account was not being managed as it should have.
"If fully successful, investors who paid in fresh money after that date should get back what they paid less the costs and the fee paid to the fund."
The second group was those who had a positive net contribution in the liquidation of RAM.
That claim was based on money going through the RAM account after the date that it alleges ANZ should have been aware that RAM was not applying the funds to dedicated client accounts as it should have been and that RAM was misappropriating funds for unauthorised purposes.
In relation to the second group the letter said as it would not be possible to trace the payments to any one investor any proceeds would have to be divvied up on a pro-rata basis relative to their net contributions to RAM.
The letter stated while it could not give accurate estimates of the claim, if all eligible investors joined "our advice is that the claim could be for more than $50 million plus interest".
So far around 200 investors have signed up.
The investor committee also enclosed advice from Queen's Counsel Justin Smith on the merits of the claim.
In an attached letter Smith said he had been provided with the advice given to the Financial Markets Authority by its lawyers.
"That advice is based on a review of documents FMA obtained from the ANZ in the exercise of its statutory information gathering powers under the FMAA, s 25."
Smith said while he had read the advice thoroughly he had not looked at the facts beyond that but said in his view the RAM investors "have a serious claim on the merits against ANZ".
The letter from the investor committee said it had also been advised that the cost to take the case could be substantial given the likelihood that ANZ would "vigorously defend the claim".
As a result the committee had approached litigation funder LPF Group and reached a funding agreement with them.
The no-win, no-fee package means investors do not have to pay anything if the claim is unsuccessful.
If the claim against ANZ is successful within a year and costs do not exceed $1m LPF will get the costs repaid and 25 per cent of any payout.
If it takes longer than 12 months or the costs exceed $1m then LPF will get the costs repaid and 30 per cent of any payout.
The investor committee will also have full authority to make decisions in the best interests of all claimants in consultation with LPF and the legal team.
But if they can't agree on whether to settle or how much to settle for then that would be decided by an independent QC.
The committee is made up of four investors who have signed up to the claim; Strahl - a retired lawyer, Southland farmer John Douglas, Auckland accountant Heather Wyse and Gray Thompson - a retired lawyer from Taupo.
Other investors may also vote to remove or replace people on the committee. The letter notes the committee members will not be paid but may be reimbursed for expenses by LPF.
The committee will use high profile law firm Meredith Connell and has retained Smith to run the case.
PwC's John Fisk, who has been in charge of RAM's liquidation, said it was in its final stages of the liquidation of the Ross Group companies and would be releasing a report soon.
Fisk recommended investors read the letters from the investor committee and consider whether to join the claim.
"It is our view that registering as a claimant is the only realistic prospect of obtaining any significant further recovery in respect of your losses apart from the final distribution in the liquidation about which we intend to provide further detail in our next report to creditors."