Lehman Australia litigated over misuse of investors’ money

Litigation firm IMF, which is already trying to scuttle an agreement between Lehman`s biggest creditors, announced its plan to fund a $1.2 billion class action on behalf of small investors that have suffered hefty losses after investing with Lehman Brothers Australia. IMF also added that the action could profit up to 600 investors that bought complex debt securities that have since grown in value.

The first of the action is on behalf of Parkes Shire in NSW and Swan Council in Western Australia. IMF said the value of their investments was $1.2 billion, although Lehman Brothers Australia`s administrators have estimated these ''contingent'' creditors' claims at up to $625.6 million.

As Mr. Walker, the executive director of IMF, said Lehman instead of acting on their behalf, created their own products and sold these products to the councils. As a result, the councils, charities and churches have ended up with potentially in excess of $1 billion in losses.

Besides, IMF has already begun legal proceedings to overturn a deed of company arrangement that offered councils between 2 cents and 13 cents in the dollar, alongside any capital gain or income from the assets, and the case, to be spearheaded by the law firm Piper Alderman, is expected to be heard as soon as next month.