IOOF bosses face ban
Investors have savaged wealth manager IOOF, stripping more than $900 million from its market value after the banking watchdog moved to disqualify its senior leadership team from running superannuation funds.
Shares in the group plunged almost 36 per cent yesterday on the bombshell revelation that the regulator had launched legal action against five of IOOF’s senior leaders: its chairman, managing director and three other executives.
It stems from claims aired at the financial services royal commission that IOOF used superannuation fund members’ own money to compensate them after an investment bungle. The Australian Prudential and Regulation Authority has begun Federal Court proceedings seeking to have the five banned from being pension fund trustees.
It claims the chair and four executives failed to act in the best interests of fund members.
IOOF shares plummeted 35.8 per cent yesterday — wiping $902 million from the group’s market value — to end the session at $4.60, down 57 per cent from the $10.72 they were fetching at the end of last year.
The wealth adviser said it was “disappointed” with APRA’s action.
“IOOF believes that these allegations are misconceived, and it and its executives intend to vigorously defend the proceedings,” it said.
Facing disqualification proceedings are managing director Christopher Kelaher, chair George Venardos, chief financial officer David Coulter, general manager of legal, risk and compliance Paul Vine and general counsel Gary Riordan.
Also yesterday, ANZ acknowledged the legal action clouded the planned sale of the bank’s superannuation business, OnePath, to IOOF for about $1 billion — a deal it struck in October last year.
In August, counsel assisting the financial services royal commission Michael Hodge explored the case of IOOF subsidiary Questor.
Mr Hodge revealed that, in 2009, a Questor-owned cash management fund accidentally paid $6.1 million too much into a super fund also overseen by Questor. The problem was detected in 2011.
To return the cash, Questor decided to reduce payments to the super fund over three years, but none of the 9000 super fund members was told.
A whistleblower then cast light on problems with the strategy of reducing distributions to the super fund. As a result, the IOOF board had to compensate some super fund members who were disadvantaged.