The Wellington High Court issued a ruling on 26 August 2019 that permits 426 investors who were duped by the Ross Asset Management (RAM) Ponzi scheme to launch a multi‑million‑dollar lawsuit against New Zealand ANZ Bank. The claim seeks compensation for the $115 million that these investors lost between 2007 and 2012 when the scheme collapsed.
David Ross, the founder and manager of RAM, oversaw a fund that catered to roughly 900 clients and controlled about half a billion dollars in assets. The operation was structured around two separate accounts: a client account that received investors’ money for purported investment, and an operating account used to pay management fees and cover company expenses. As operating costs grew beyond the cash in the operating account, Ross began siphoning money from the client account to keep the business afloat, while falsifying records to show strong returns.
In reality, the investors’ capital was not being deployed as promised. When the scheme fell apart, the money was gone, and Ross was later convicted of fraud and sentenced to ten years in prison.
Investors allege that ANZ, which serviced RAM’s accounts, ignored clear warning signs that Ross was moving funds between the two accounts inappropriately. According to the claim, the bank concealed the issue for three years by pursuing litigation aimed at suppressing the release of relevant documents. The Financial Markets Authority (FMA) eventually succeeded in a separate action against ANZ, forcing the bank to disclose records that highlighted its mishandling of RAM’s accounts.
John Strahl, who leads the RAM investors’ group, said the victims were unaware that any court case concerning the document disclosure existed until the High Court’s decision was announced. “We were kept in the dark about the bank’s actions,” Strahl said.
“The ruling now gives us a chance to hold ANZ accountable for its role in this disaster.” ANZ’s defence has been that it was misled by Ross and had no knowledge of the fraud, arguing that the scheme’s sophistication made detection impossible. The High Court rejected this position, stating that the bank had a duty to monitor the accounts and that its failure to do so contributed to the investors’ losses.
A spokesperson for the investors’ legal team echoed the court’s view, noting that “ANZ had the tools and the responsibility to stop this scheme, and it failed.” Out of the 900 clients affected by the RAM fraud, the 426 who have joined the lawsuit represent more than two‑thirds of the total. While the combined loss for these claimants is $115 million, the overall financial impact of the scheme may be larger.
The suit alleges breach of trust and negligence on the part of ANZ and seeks to recover a substantial portion of the lost funds. The next phase will see ANZ contest the case vigorously, likely reiterating its claim of being unaware of Ross’s criminal conduct. Nonetheless, the High Court’s decision provides the investors with a solid legal foundation to proceed to trial, where evidence regarding the bank’s handling of the accounts and its awareness of the scheme will be examined.
This judgment is seen as a significant win for the victims, who have spent years pursuing redress. It also sends a clear message to financial institutions that they must actively monitor client accounts and act to prevent fraud, even when the wrongdoing originates from a trusted money manager.
The outcome of the forthcoming trial will determine whether ANZ will be required to compensate the victims of one of New Zealand’s largest Ponzi schemes.
