ANZ loses final court battle with regulator over Ross Asset Management files

Friday, 12 April 2019

David Ross headed the country's biggest Ponzi scheme.

ANZ has failed in its bid to stop the Financial Markets Authority (FMA) sharing its Ross Asset Management files with third parties.

The bank and market regulator first went to the High Court in 2017. Much of the key information about the case has been suppressed until now.

It started when the FMA began receiving complaints from investors in Ross Asset Management, the country's largest Ponzi scheme.

The business failed in 2012, taking millions of dollars of investors' money with it.

* Supreme Court rules investor in Ross Asset Management has to repay $454K

* Liquidators set to appeal decision giving broker back Ross Asset Management shares**

ANZ said the regulator was acting out of bounds when it asked for access to its files.

Ross Asset Management owner David Ross was unsuccessful in his bid for parole this year. He is serving a 10-year, 10-month jail term.

ANZ was the company's banker.

The FMA wanted to determine where the company's investors' funds were and whether the money could be returned to them.

Ross Asset Management's liquidators obtained legal advice on the prospect of a claim against ANZ for participation in the company's breaches. It was determined that it was not the liquidators' place to do that, but should be left to the investors or the FMA.

The FMA then used its legal powers to require the bank to hand over records, which it said it would disclose to the company's liquidation committee as part of its investigation.

It had formed the view that the bank could be liable to Ross Asset Management investors in 'knowing receipt and dishonest assistance'.

Having access to those documents would help it to obtain additional information from investors, determine the next steps to enable the investors to evaluate the merits of a claim against ANZ and to enable the FMA to consider whether to exercise its powers under section 34 of the FMA Act to start proceedings.

But the bank said the FMA was acting outside its legal remit and breaching confidentiality agreements. The High Court initially sided with that view but the decision was overturned by the Court of Appeal.

The Supreme Court decision said the bank had not pointed to any particular confidentiality concerns that were not sufficiently addressed by the FMA's proposals.

'We do not consider that this application raises issues of general or public importance outside of the operation of the FMA Act.'

The FMA was awarded $3500 in costs.

In a statement, ANZ said the ruling was disappointing.

'ANZ provided a significant amount of documents to the FMA to assist in its investigations into Ross Asset Management. ANZ released confidential information - including customer information - to the FMA, as required by law. The FMA wishes to pass on selected documents to a third party.

'We believe customers and companies alike need to have confidence that confidential information is treated as such, and when provided to a regulator, is only used by that regulator in accordance with their statutory mandate. ANZ brought this proceeding to test the issue of the proper application of certain provisions of the Financial Markets Authority Act which applied to the FMA obtaining confidential documents and how those documents could be used. We believed this issue raised significant questions about the use of confidential information by a regulator.'

But the regulator welcomed the decision.

'Now that the restrictions on confidentiality over all these matters has been lifted, the FMA will be able to engage with the liquidation committee of Ross Asset Management, as a proxy for RAM investors, and the liquidators of RAM on the substantive matters at the heart of this case,' it said.

'ANZ's decision to judicially review the FMA and to seek confidentiality over the High Court and Court of Appeal judgments meant our ability to talk to investors was curtailed.

'The FMA at this point has made no decision on the use of its section 34 powers under the FMA Act. A significant part of our consideration of our Section 34 powers involves engaging with the appropriate representatives of impacted investors first.'