May 15, 2018 / 2:42 AM / 4 months ago

Australia's embattled AMP in unprecedented class-action feeding frenzy

SYDNEY (Reuters) - Australian law firm Maurice Blackburn said on Tuesday it planned to sue AMP Ltd (AMP.AX) on behalf of shareholders after allegations of misconduct sent the wealth manager’s shares tumbling, the fifth potential lawsuit against the company.

FILE PHOTO: The logo of AMP Ltd, Australia's biggest retail wealth manager, adorns their head office located in central Sydney, Australia, May 5, 2017. REUTERS/David Gray/File Photo

AMP has lost almost 20 percent of its value or A$2.5 billion (1.4 billion pounds) since the wrongdoing was exposed by a government-ordered inquiry into Australia’s finance sector last month, raising the prospect of legal fallout.

Two law firms have already filed shareholder class actions against Australia’s biggest wealth manager, while media reports have said another two are considering suing the 169-year-old company. If all five file suit, it would be the most class actions against an Australian company at one time.

AMP declined to comment on Tuesday. It has said it would defend itself against the two lawsuits that have been filed.

“Investors have every right to be disappointed with AMP’s conduct,” Andrew Watson, the National Head of Class Actions at Maurice Blackburn, said in a statement.

Maurice Blackburn said its suit would offer low funding commissions and would not charge fees unless it won, a sign of competition between firms to sign up AMP shareholders.

The Maurice Blackburn action is being funded by Singapore-based International Litigation Funding Partners.

Global law firm Quinn Emanuel Urquhart and Sullivan, and Melbourne-based firm Phi Finney McDonald each tabled actions against AMP last week.

Most likely a judge will decide how to proceed following discussions between the law firms and their financiers. AMP could also submit a request to the courts for the cases to be amalgamated.

“It’s all new, untested territory, but one thing is certain, there will be one action,” said Hugh McLernon, executive director at Australian-listed litigation funder IMF Bentham, (IMF.AX) which is bankrolling the Phi Finney McDonald lawsuit.

The court would decide who runs the action based on factors like how much lawyers would charge and whether the litigation funders planned to stay to the end of the case, potentially years away, McLernon added.

AMP, a household name for Australian financial planning, has about 740,000 shareholders, one of the country’s biggest registers. To qualify, shareholders would need to have bought their stock when the lawsuits allege the misconduct took place.

University of New South Wales Professor Michael Legg said shareholders should wait before choosing which class action to join in.

“The problem is once they enter into a litigation funding agreement or retainer, then they may be stuck with that agreement,” Legg said.

The Australian Financial Review has reported Australian firms Slater & Gordon Ltd (SGH.AX) and Shine Lawyers Pty Ltd are also preparing lawsuits against AMP.

The AMP lawsuits are the first linked to allegations from the Royal Commission inquiry, which has uncovered widespread wrongdoing by Australia’s leading financial firms.

The country’s biggest lender, Commonwealth Bank of Australia (CBA.AX), is facing a separate Maurice Blackburn-run class action over allegations it failed to properly disclose breaches of anti-money laundering rules.

Reporting by Paulina Duran; Editing by Stephen Coates

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