Bell Potter Class Action 
Shareholder class action regarding investments in Progen Pharmaceuticals Limited
Preliminary Case Analysis
Overview
Bell Potter Securities Limited (‘Bell Potter’), a member of the Bell Financial Group of companies (ASX Code: BFG), is one of Australia’s leading full service private client stockbroking and financial advisory firms. As well as private client services, Bell Potter offers specialised advice to the wholesale market.
Bell Potter’s website notes the following:
a) It is Australian owned and managed;
b) It has access to quality research;
c) It has one of the largest retail distribution networks in the country;
d) It offers private clients a comprehensive range of services that includes portfolio management and administration, cash management, margin lending and superannuation.
From December 2006, Bell Potter brokers actively promoted investments in PGL shares allegedly based on gross overvaluations of PGL stock.
PGL is a Brisbane-based biotechnology company committed to the discovery, development and commercialisation of the therapeutics primarily for the treatment of cancer.
A number of aggrieved investors have since then approached Slater & Gordon to investigate the viability of an investor class action.
Key allegations
The alleged misconduct was contained in Bell Potter online Research Papers and Investor Reports distributed to Bell Potter customers nationally.
In a Bell Potter Research Paper dated 5 December 2007, a different valuation methodology was used to value PGL stock but it is alleged that had no reasonable basis and continued to wrongly overvalue the stock.
The alleged misconduct will also include circumstances surrounding the PGL capital raising in May 2007 co-underwritten by Bell Potter.
It is a possibility that the alleged misconduct will attract ASIC and criminal sanction.
For class action remedies, we believe there is a strong case to establish that during the Class Period:
i) Bell Potter’s valuations of PGL shares did not use the appropriate methodology and over-valued the shares by at least 50%;
ii) Bell Potter had no reasonable basis to adopt or recommend its valuations;
iii) Had Bell Potter adopted the correct methodology, at all material times it would not have given the PGL shares a ‘Buy 2’ or “Buy” rating but a ‘Speculative’ rating;
iv) Bell Potter failed to advise or warn the customers that the PGL share value would not reach $14 per share or any amount close to $14 per share;
v) Bell Potter failed to advise or warn the customers not to purchase any PGL shares or enter into the trades in question;
vi) Bell Potter failed to advise or warn the customers to sell all PGL shares that they held;
vii) Bell Potter failed to inform the customers of any conflict of interest it had with respect to PGL shares stemming from its commercial dealings with PGL in the form of underwriter, corporate advisor and/or otherwise.
Litigation funding offer
We are pleased to announce that we have reached an agreement with Litigation Lending Services Limited to provide funding for the class action. The funding offer is subject to minimum take up by institutional investors.
Recovery
Our objective is to obtain the earliest possible resolution and will be exploring the possibility of resolving the litigation quickly and less expensively through a mediation process most likely within 10 months of the date of commencement of court action.
If an early out of court resolution is not possible, and the litigation is contested to a final judgment (it should be noted that no class action in Australia of the type contemplated has gone to final judgment), we estimate that the court action could be brought to judgment in the Federal Court of Australia within 2.5 to 3 years of commencement.
Anonymity
One of the features of the contemplated class action is that an investor can remain anonymous as a member of the class for a considerable time, if not the whole period prior to an out of court settlement. If you prefer to remain anonymous, please ensure that you tick the applicable box in the Questionnaire.
Key Information
Class Period:
December 2006 to December 2007 inclusive
Proposed Claim
The proposed class action is by PGL security holders against Bell Potter Securities Limited
Nature of Misconduct
It would be alleged that Bell Potter:
- Engaged in false, misleading and/or deceptive conduct;
- Breached its fiduciary duties;
- Failed to keep proper financial records; and
- Failed to provide statement of advice.
Eligibility to Join
You may be a class member if you:
a) are/were a client of Bell Potter; and
b) obtained advice from Bell Potter in relation to PGL during the Class Period; and
c) relying (at least in part) on Bell Potter’s advice, invested in PGL during the Class Period; and
d) have suffered a financial loss as a result of your investment in PGL.
Next Steps
Please complete, sign and return our Questionnaire if you would like to receive our funding proposal and any email Information Bulletins regarding the class action at no cost or obligation.
Deadline
Please note that you only have until 31 May 2009 to consider our funding proposal and join the class by returning your signed Litigation Funding Agreement and Legal Costs Agreement and Disclosure Statement to us.
Frequently Asked Questions:
Slater & Gordon has prepared answers to a number of Frequently Asked Questions to assist you with certain queries. |
Contact Details
You may also contact us at:
Slater & Gordon
Bell Potter Class Action
GPO Box 4864
MELBOURNE VIC 3000
Phone: +61-1800-555-777
Fax: +61-3-9600-0290
Email enquiry