National law firm Slater and Gordon is continuing its investigations and legal action against financial advisors who recommended the Basis Yield Fund to investors.
Slater and Gordon litigation lawyer Mark Walter said up to 700 Australian investors were estimated to have been affected by the collapse of the Basis Yield Fund in 2007, with the combined loss of capital estimated to exceed $300 million.
He said the firm had been contacted by about 100 people so far who had bought units in Basis Funds.
“Retail investors were amongst the hardest hit by the collapse of the Basis Yield Fund, because financial advisors around Australia had been recommending the fund as a product that was safe and suitable for these types of investors,” Mr Walter said.
“The Basis Yield Fund was being promoted as a product that was a stable, low-risk and fixed-interest investment, but in reality it was a high-risk, international hedge fund with exposure to products that were not
necessarily suitable for retail investors, retirees and charities.” Mr Walter said the contents of the Product Disclosure Statements issued for fund should have “raised alarm bells” for financial advisors who were researching the fund with a view to recommending it to their clients.
“The product disclosure statements issued by Basis outlined the high level of risk and the fact that its funds were trading in a number of exotic financial products, including derivatives, collaterised debt obligations and
global residential mortgage backed securities.” Mr Walter said Slater and Gordon was pursing a number of financial advisors, from smaller advisory services to large financial institutions, on behalf of their former clients.
“It is being alleged that the financial advisors have either breached the terms of their retainer with their clients; that they have been negligent and, or engaged in misleading or deceptive conduct in advising their clients; and have contravened consumer protection provisions of the Corporations Act.
Slater and Gordon is pursuing the actions through various means, including by litigation where necessary. It has also entered into an agreement with an Australian litigation funder specifically for the purpose of pursuing claims against financial advisors, including advisors who recommended the Basis Yield Fund to clients. Mr Walter said that, while the Basis Yield Fund collapsed in 2007, many investors received advice to invest in the fund much earlier and their rights to bring claims may be expiring.
“In Australia, individuals generally have six years from the date of a cause of action for economic loss accruing in which to bring a legal claim, otherwise it becomes statute-barred. “We encourage all retail investors to obtain legal advice about their position without delay.”