The story begins with a collapse. Ross Asset Management, the largest Ponzi scheme in New Zealand’s history, went under in late 2012, and in the years that followed the human cost came into focus: more than 700 clients cheated out of $115.5 million, with only around $10 million ever recovered. David Ross, the Wellington financier who ran the firm, pleaded guilty to eight charges and was jailed in November 2013 for 10 years and 10 months. His elaborate scheme had run from 2000 to 2012, and for those involved the money was largely gone.
What unfolded next moved the blame question from the fraudster to his bank. In July 2019, investors filed a claim in the High Court at Wellington against ANZ, the bank that handled the Ross Asset Management accounts. Around 200 investors had signed up, and the total at stake could reach into the tens of millions depending on how many more joined. The investors alleged ANZ breached its duties as the firm’s banker through negligence in how the accounts were managed, and through claims known as knowing receipt and dishonest assistance.
The action was years in the making, and the wait itself became part of the grievance. John Strahl, speaking for the investor group, said the claim rested on investigative work by the Financial Markets Authority into how ANZ had managed the accounts before the collapse. He said ANZ had spent more than three years in court trying to stop the FMA from sharing what it had found with investors, until a Supreme Court ruling finally cleared the way. Strahl said: “Such delays have simply prolonged the agony for RAM investors, many of whom have already psychologically written off their investment.” Once the findings arrived, the group commissioned its own analysis and legal advice, and the conclusion was firm. “This confirms that we have a very good claim against ANZ and we are now proceeding with legal action.”
At its heart, the case is about where the clients’ money actually went. Under the law, Strahl said, Ross Asset Management was supposed to hold investor funds in a client account and invest them on each client’s behalf. Instead, the investors claim ANZ imposed no such requirement and let deposits flow to non-investment purposes: covering RAM’s own expenses, paying down the firm’s unauthorised overdraft with ANZ, and repaying other investors. Strahl argued that a bank of ANZ’s standing should have seen it: “The ANZ is one of the largest fund managers in New Zealand and Australia” and, on his reading, “they know how client funds are meant to be managed.” The FMA, he added, had concluded that ANZ may be liable to the RAM investors for taking part in the firm’s breaches of trust, given how it let those accounts be run.
ANZ’s answer was unambiguous. A spokeswoman for the bank said “ANZ was Ross Asset Management’s banker and like the investors was misled by Mr Ross.” The bank rejected the allegations outright, she said, and would defend the claim brought by the investors and their litigation funder.
That funder, LPF Group, is New Zealand’s largest and specialises in representative actions and large commercial claims. It covers the investors’ costs, takes a fee only if the claim succeeds, and must pay the bills if it fails, so investors face no out-of-pocket risk. Strahl said every RAM investor who had made a positive net contribution by the end of the liquidation should be eligible to join.
The FMA, for its part, welcomed the chance to step back. Chief executive Rob Everett said the scheme had dealt a very significant blow to a large number of investors, and recounted the agency’s own long fight to reach them. Everett said: “We invested considerable time and resources in litigating this matter, which went all the way to the Supreme Court.” The FMA, he added, had established the investors’ right to make their own informed decision. With private litigants now pursuing the claim, the regulator saw no need to act in its own name. “It has taken a long time to get to this point, but we think that this is the right result.”
Sources
- Ponzi investors suing ANZ Bank for their losses – Murrays Legal
- Investors in NZ's biggest ponzi scheme to sue ANZ for tens of millions – NZ Herald
