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The number of claims against a south west financial advisor who inappropriately directed local investors' funds into high-risk financial products that subsequently collapsed is set to grow following revelations that a large mortgage fund has entered administration.
Slater and Gordon commercial lawyer Jessica Latimer, who is assisting more than 20 clients in the Hamilton, Portland and Warrnambool areas recoup money they lost on investments recommended by the financial advisor, said news that Gold Coast-based LM First Mortgage Income Fund had collapsed would likely result in further claims.
“The fact is LM was one of the financial products that this particular advisor was steering clients towards and it is now highly unlikely that they will be able to recoup any money from the fund, leaving them no option but to pursue the advisor through litigation,” Ms Latimer said.
Funds invested in LM First Mortgage Income Fund were frozen in March 2009, leaving the life savings of many south west locals, including farmers, retirees, factory workers and professionals, in limbo.
“We are talking about a significant amount of money that was put into a high-risk fund despite that fund clearly being entirely inappropriate for these people who were looking for a safe place to put their money,” Ms Latimer said.
She said the number of claims against the advisor had been growing steadily since February last year, when local media reported that a Slater and Gordon client from Portland had been successful in recouping a significant portion of the six-figure sum invested in a high-risk fund at the advice of his financial advisor.
Ms Latimer said investors generally had six years to lodge a claim against financial planners before their right to sue expires, meaning those who put money into LM in 2007, in the pre-GFC boom period, should seek immediate legal advice to protect their rights.
“There will certainly be others in the same situation who are yet to come forward and my advice to them would be to seek legal advice as soon as possible as their right to pursue litigation will soon expire,” she said.
Ms Latimer said financial advisors could be pursued under the Corporations Act and through the civil courts if they were negligent in their client dealings.
“It is the responsibility of a financial advisor to match a client’s investment portfolio with their investment objectives,” she said.
“For a financial advisor to tell a retiree, for example, with limited resources to back up their investments to put their money into a product like LM is a clear example of an advisor abrogating that responsibility.”
She said the same applied to a range of other financial products pitched to local investors by their financial advisor, including Basis and Premium Income Fund.