CBL Corporation shareholders have filed a class action lawsuit against the insurer at the High Court in Wellington over alleged misleading statements, failure to disclose significant information, and insider trading.
The class action, led by Harbour and Argo Investments Limited, claims that the CBL directors provided misleading statements in the initial public offering (IPO) documented issued when the firm listed on the NZX sharemarket – topped with breaches of continuous disclosure obligations and insider trading.
“The claim alleges the directors of CBL are responsible for misleading statements in the IPO documents that, at the time the company listed on the NZX and ASX, it had adequate financial reserves to meet its insurance obligations,” Andrew Bascand, chair of the CBL class action claim committee told Stuff.co.nz. “The claim also alleges that directors are responsible for the company failing to update the market in the period after the IPO with material information about CBL’s financial position.”
“The insider trading allegations in the statement of claim allege that directors Peter Harris and Alistair Hutchinson, through companies controlled by them, sold shares in CBL while they were in possession of material information relating to CBL that they knew was not available to the market generally.”
The shareholders are seeking maximum compensation for their “significant financial losses” when the firm collapsed in 2018.
“Shareholders globally lost hundreds of millions of dollars when CBL collapsed,” Bascand said. “The directors must be held to account for their actions and shareholders compensated for their losses. We believe legal action is the only way investors in CBL can get any money back.”
Peter Harris and Alistair Hutchison, directors of CBL, blamed the Reserve Bank of New Zealand (RBNZ) for their failure.
“It is a cheap shot by an NZ based litigation funder to make unsubstantiated and damaging allegations designed to legitimise an action and garner support ahead of a competing litigation funder,” Harris said in a statement, published by Senecall Akers.
“The fact is that these allegations are just that - allegations. The court is the proper forum to decide whether these allegations are true or not or had anything to do with any loss - not through the media before the court case is even heard.”
