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."
Saul Eslake worked as an economist in the Australian financial markets for more than 25 years, including as Chief Economist at McIntosh Securities (a stockbroking firm) in the late 1980s, Chief Economist ... Watch video
Strength doesn't just come from numbers, it also comes from diversification.
That's the story behind the success of BlackRock's multi-asset income fund, which has delivered a high 7.4% annualised yield ... Watch video
You are invited to the Advisers Big Day Out (ABDO) Investment Manager Roadshow for 2016, where the country's leading fund managers will come to Victoria and Tasmania in May and share their knowledge ... Watch video
Financial Standard editor Mark Smith presents a roundup of the week's biggest industry news and executive appointments. In this week's news:
Sunsuper overhauls TPD insurance
Sunsuper has announced changes ... Watch video
We invite you to watch our latest video featuring Reece Birtles, chief investment officer of Legg Mason affiliate Martin Currie Australia.
Amid volatile markets, treacherously low term deposit rates and ... Watch video
Get it Daily
FREE to your inbox, get the Financial Standard Daily Email.