FRT Services: APAC: How to Protect Retail Clients’ Assets in Australia’s Evolving Landscape

 

FRT’s Account Watch Class Actions Monitoring Service is available to Powerwrap clients. To find out more, please contact your Powerwrap Relationship Manager.

 

By Mary-Beth Hernandez, Director of Strategic Accounts, FRT Services

The Australian shareholder class action landscape has grown significantly over the last several years. It is now the second-most active jurisdiction in the world in terms of growth in the litigation market. In this Q&A, FRT’s APAC Managing Director, Sean Cookson, discusses why it is more important than ever for Australian firms to ensure that retail investors can recover everything legally entitled to them in class action settlements.

Mary Beth: Before we dive into what’s happening in Australia, let’s start with the basics to set some context. What is a securities class action?
Sean: A securities class action is a lawsuit filed by investors who bought or sold a company’s publicly traded securities within a specific time period (known as a “class period”) and suffered economic injury as a result of violations of the securities laws. Such violations may include misleading or deceptive conduct and/or breaches of requirements to disclose information.

Mary Beth: What are the benefits of joining a class action?
Sean: When investors join class actions, they consolidate their claims into a larger legal action with other investors who have been similarly impacted. The class aims to hold the company accountable for its actions. Investors who have been damaged and join the class action may recover their share of the settlement funds. To learn more about how the recovery process works, download our primer on shareholder recovery.

Mary Beth: How is the Australian landscape evolving? What trends are you seeing in shareholder litigation—and beyond?
Sean: Securities litigation is at an all-time high. Outside of North America, Australia is now the most active jurisdiction for shareholder litigation. To date, Australian class actions have recovered nearly $2 billion for investors, with many active cases in the pipeline pending settlement. In addition, we’ve seen a great deal of fallout from the Royal Commission inquiry into financial sector misconduct; it seems that no area of banking and finance is exempt from potential regulatory reform. In this era of heightened accountability to investors, firms must upgrade their existing governance, controls and protocols to mitigate risks associated with poor governance around class actions.

Mary Beth: How are retail investors impacted by these changes?
Sean: Like institutional investors, retail investors are eligible for recovery in class action settlements if they held the relevant security during the class period. However, retail investors have historically been underserved in this area. Many financial institutions do not have clear policies and procedures in place for facilitating class action recovery on behalf of their wealth and retail clients. Because claims filing can be complex and time-consuming, retail investors often end up throwing the claim forms out or completing the forms incorrectly, thereby leaving money on the table.

Mary Beth: How is FRT addressing this market need?
Sean: FRT is committed to democratising the recovery process to ensure individual investors can access their settlement proceeds just as institutional investors do. We offer a focused solution called AccountWatch to equip firms with a program for automated monitoring, filing and recovery on behalf of their retail client base across jurisdictions, including Australia.

Mary Beth: How does AccountWatch work?
Sean: AccountWatch uses the same advanced recovery technology platform, expert processes and experienced professionals that our 800+ clients rely on for best-in-class recoveries. FRT maintains an incredibly comprehensive database of shareholder litigation. We are constantly monitoring the market for new and updated shareholder class action settlements. We match our clients’ trade data against our litigation database to identify all eligible claims. We then prepare and submit all the necessary forms and paperwork on behalf of eligible investors. When payment is remitted, we deposit all settlement funds directly into the clients’ brokerage accounts. We have implemented numerous checks and balances along the way to maximize client recoveries and ensure everything is as seamless as possible. Most importantly, we work with each client to design the AccountWatch program to be purpose-built to their needs. Once turned on, AccountWatch provides automated, always-on monitoring and protection, delivering peace of mind to both firm and client alike. Learn more about AccountWatch here.

Mary Beth: What are the benefits of AccountWatch?
Sean: AccountWatch turns a historical pain point into a value-added opportunity, eliminating time wasted by both the client and the firm. ROI is gained through both proactive client service and potential for net new assets. And compliance risk is eliminated through defined controls and processes. Those are just a handful of benefits. Whether you are a wealth management platform, an advisory firm, a private bank or any other type of institution servicing wealth and retail investors, you can reap tremendous advantages by implementing a proactive governance solution like AccountWatch. Download our whitepaper to learn more.

Mary Beth: How can a firm get started?
Sean: Due to the complexity involved in the class action settlement recovery process, outsourcing this function is an attractive option for turning this administrative burden into a competitive advantage. By working with the right partner, you can address the growing complexities of the class action landscape, demonstrate proactive governance, and ensure investors recover all money legally entitled to them. If you are interested in learning more about AccountWatch and how we can design a program tailored to the needs of your firm, please reach out to our team at accountwatch@frtservices.com.