Expat investors launch suits against advisers, trustees and insurance firms

Expatriate investors in a failed Australian mortgage fund have started to sue financial advisers, pension fund trustees and listed life insurance companies in a bid to recoup the nearly A$400 million (HK$2.89 billion) that disappeared in one of the largest scandals to rock the offshore investment industry in recent decades.

The Australian regulators are still investigating what happened to the LM Managed Performance fund, now valued at five Australian cents on the dollar.

LM founder Peter Drake denied the fund was a sham in a recent Post Magazine interview, and instead blamed asset price write-downs and poor currency hedging.

Australian-based investors had already won compensation because financial advisory firms gave inadequate advice and did limited due diligence, said Fraser Whitehead, the head of group litigation at law firm Slater & Gordon.

The challenge was harder for Asian-based expatriates as many financial advisers have no professional indemnity insurance. That made insurers and trust companies a natural target for litigation, Whitehead said.

Several LM investor groups told the South China Morning Post they were consulting lawyers and filing suits.