NAB settles class action lawsuit at $115m
ONE of Australia's biggest banks has reached a $115 million settlement with more than 15,000 shareholders who lost millions during the sub-prime mortgage crisis in 2008.
National Australian Bank agreed to settle the class action, which came about after 13.5% was wiped off the bank's share price in a single day.
The dramatic fall in the share price came after the bank revealed in July, 2008 that it had lost up to $1 billion from exposure to "toxic debts" in the United States.
News of the settlement came less than a month before the case was due to go to trial in the Victorian Supreme Court.
Law firm Maurice Blackburn brought the class action, which was by International Litigation Funding Partners, against the bank two years ago.
Jacob Varghese, who was the principal lawyer on the class action, said the case highlighted the "duty" companies had to keep shareholders informed.
"This settlement provides redress for thousands of shareholders who, the plaintiffs alleged, suffered losses as a result of NAB's conduct," Mr Varghese said.
Shareholders who purchased shares between January 1 and July 24, 2008, were involved in the class action.
George Vlachos, one of the lead plaintiffs in the case, invested in NAB shares between January and May that year.
The Sydney-based small business owner, whose private company Pathway Investments invests in the stockmarket to provide additional family income, lost more than $3000 when the stock price plunged on July 25, 2008.
"It was important to me that shareholders take a stand for the principle of continuous disclosure," said the father of two.
"For the stockmarket to work, investors have to have confidence in the system.
"Class actions like this send a powerful message that companies have to keep us informed of what is going on in their business."
In a statement NAB company secretary Michaela Healey said the settlement was not an admission of liability by the bank, but was reached in the "interests" of shareholders.
"We always said we would vigorously defend the class action and we remain confident about our legal position in the proceedings," Ms Healey said.
"The settlement of the class action is a purely commercial decision made in the interests of our shareholders.
"We are pleased to put this matter behind us so that we can continue to focus on improving returns for our shareholders without the distraction and significant expense of a lengthy trial."
The Supreme Court has to sign off on the settlement, which included court costs and interest.