The toothless tiger that ASIC is proving to be a great source of income for IMF as it outsources its most of its investigation/prosecution obligations to shareholders.
Also very interesting, as Clime is a shareholder in IMF. I wonder if they were buying prior to yesterday's announcement
From AFR today...
Litigation funding company IMF Bentham is on a roll as it continues to fulfil the role that many believe should be undertaken by the Australian Securities and Investments Commission.
Several announcements over the past month about new funding agreements for class actions have helped kick along the IMF Bentham share price. The stock ranks among the top performing on the ASX this year with a total return of 46.7 per cent.
IMF Bentham has become one of the de facto enforcers of the continuous disclosure regime. Several years ago ASIC decided to outsource the bulk of its policing of alleged false and misleading disclosure by public companies.
This was a pragmatic decision aimed at passing on the risk of litigation against boards of directors and management to the private sector.
On rare occasions ASIC does the job of enforcement itself as happened this week with its
court action against Vocation Ltd and three of its directors and officers: Mark Hutchinson, John Dawkins and Manvinder Grewal.
Vocation and the three defendants allegedly breached continuous disclosure obligations in 2014. ASIC says Vocation failed to notify the ASX of information that was generally available and a reasonable person would expect to be available.
There does not appear to be any rhyme or reason as to why ASIC will choose to take on a particular case of alleged non-disclosure.
One fund manager, John Abernethy from Clime Capital, reckons ASIC should do more to assist the private sector in pursuing alleged breaches of continuous disclosure.
Clime is the representative applicant in a class action against engineering services company UGL Ltd being brought by Slater and Gordon. This is funded by IMF Bentham.
"The proposed class action will allege that UGL failed to disclose that the construction of a power plant for the Ichthys LNG project in the Northern Territory was running behind schedule and was subject to increased project costs," the law firm said.
"This conduct is alleged to amount to misleading or deceptive conduct, and a breach of UGL's obligations to disclose to the ASX all information that a reasonable person would expect to have a material impact on the price of its securities."
All shareholders who acquired shares in UGL between August 8, 2014 and November 5, 2014 have been invited to participate in the class action. During this time frame Trevor Rowe was UGL chairman and the CEO was Richard Leupen.
Abernethy, who is chief investment officer at Clime, has a record of success in the class action business. He was the driving force behind a class action against Credit Corp in 2009. That case was settled out of court.
Abernethy says ASIC could use its compulsory information gathering powers to assist in the policing of alleged breaches of continuous disclosure.
He says that class actions would be resolved quickly if ASIC used its powers to gather information and, in effect, gather evidence on behalf of shareholders seeking redress for alleged misleading conduct.
Abernethy says ASIC should explain why it has done nothing about the alleged misleading and deceptive conduct at UGL.
This year's spike in the IMF Bentham share price appears to be related to a change in strategy at the company under chief executive Andrew Saker.
The company is funding an increased number of smaller matters. But earnings are likely to remain lumpy because of the time involved in resolving cases and the unpredictability of achieving favourable judgments.
Earlier this month IMF Bentham said it proposed to fund a class action by shareholders of Hastie Group against Deloitte Touche Tohmatsu and Deloitte Corporate Finance related to alleged misleading and deceptive statements in a prospectus issued by Hastie in 2011.
