More money is available for victims of the Storm Financial collapse, after the Commonwealth Bank of Australia (CBA) and ASIC reached a settlement agreement.
Up to $136 million will be offered as compensation for losses suffered by CBA customers who borrowed from the bank to invest through Storm, including CBA customers who are members of a class action against the bank which is running concurrently.
The $136 million is in addition to payments of approximately $132 million, and other benefits CBA has already provided to Storm investors under its CBA Resolution Scheme, said ASIC.
The additional money, "is a timely, fair and certain outcome for Storm investors who borrowed from CBA," said ASIC chairman Greg Medcraft.
"Storm investors can be confident we would not have agreed to a settlement unless we thought the compensation was appropriate."
CBA's additional compensation is intended to ensure that each CBA investor who takes part in the settlement will get compensation of approximately 55% of their losses as calculated by an ASIC compensation model developed in conjunction with external forensic accountants.
This calculation takes into account the compensation CBA already provided to investors under its Resolution Scheme.
Subject to the Court dismissing ASIC's claim against CBA, this agreement will bring to a close the legal action against CBA in ASIC's unregistered managed investment scheme proceedings which were brought in the Federal Court of Australia in Brisbane in December 2010.
ASIC will continue the unregistered managed investment scheme proceedings against Storm, Bank of Queensland and Macquarie, which are scheduled to start on Monday 17 September 2012.
No admission of liability was required through the agreement, said CBA in a statement, which also said that the bank would continue to defend the class action proceedings, which "involve distinct factual and legal issues."
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