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IOOF legal loss exposes it to tens of millions in compo

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27.09.2019

A week is a long time in business. And so it was for financial services giant IOOF which last week celebrated a high profile win in the Federal Court only to find itself on the wrong end of a case days later that exposes it to millions of dollars in compensation for breaching its duties as a trustee.

In a judgment in the Supreme Court of NSW, IOOF subsidiary, Australian Executor Trustees (AET), was found to be liable to pay up to $82 million in compensation to thousands of scheme investors after it was found to have breached its duties as trustee of the SEAS Sapfor forestry scheme.

The investors put money into forestry schemes. Credit:Andrew Quilty

Last November IOOF sold the AET Corporate Trust to Sargon Capital for $51 million but it indemnified Sargon for any liability relating to the legal action.

The judgment was handed down on Thursday but it took IOOF until Friday at 3.58pm to inform the market of the loss. The statement followed inquiries from The Sydney Morning Herald and The Age hours earlier as to why the company hadn't issued a statement.

In its statement to the ASX, IOOF said it was currently discussing the compensation with its insurers but that the maximum exposure to IOOF, net of insurance proceeds, was $16. 5 million.

It said it expected to appeal the judgment. The case puts IOOF and its role as a trustee back in the spotlight........

© The Age