Ross Asset Management Case Goes to Trial as ANZ Loses Motion
In her 65-page decision, Justice Jillian Mallon ruled that the case against Ross Asset Management will go to trial. This came after ANZ Bank filed to have the case thrown out before trial. Ross Asset Management has been called the biggest Ponzi scheme in New Zealand since its went under in 2012. According to the NZ Herald, investors entrusted at least $450 million to Ross Asset Management, much of which was allegedly grossly mismanaged with help from their bank, ANZ. Charges in the class action include breach of trust, misused overdrafts which led to fraudulent fees and interest charges, and negligence. Estimated losses are listed around $100 million, though only $10 million has been recovered thus far. At least 500 investors have signed on to take part in the class action, which is being funded by LPF Group. Their arrangement indicates that LPF Group will get 25% of the award should the case settle by the end of June. If the case goes into July and beyond, LPF will receive 30%. Without funders like LPF, investors may not have been able to organize for a class action of this size and length. The alleged breaches all occurred prior to 2012, which means the case could take more than a decade to reach a conclusion. This is exactly the kind of high-value case where litigation funders can be of the most help to clients who have been wronged by large entities.
INVESTOR INSIGHTS
Frequency In terms of frequency of co-investment opportunities, almost 50% of respondents indicated they have from 1 to 5 opportunities in a given year, with just over 20% in the 6-10 range, and a few managers indicating they had 20 such opportunities in a given year. The number of opportunities directly correlated with the size of the funder and the size of the cases they typically finance. 
Co-Investor Characteristics Regarding the characteristics that are most important in a co-investment partner, speed to commitment and having a funded capital source ranked the highest, with responsiveness and understanding complex litigation also ranking highly. However, there was not a huge disparity in terms of the importance of the six criteria listed, suggesting that all criteria were factored into their decision-making process. Keep in mind that the compilation of rankings on the chart below is an average of the six criteria, so a high number on the chart should be viewed as being more important (even though that answer drew more 1's and 2's), whereas a low number on the chart should be viewed as less important. For example, 'Speed to Commitment' and 'Having a Funding Capital Source' both received the most 1's and 2's, but their average ranking is the highest and therefore most important. 'Flexible Capital' received the most 6's, but has the lowest average score, and is therefore the least important metric. 
When we dive further into the ‘speed to commitment’ characteristic, we find the vast majority of respondents expect a commitment within 3-4 weeks. It remains to be seen if expectations and reality are in alignment, a good question to include in the next survey. 
Expected Duration With respect to the underwritten expected duration, most fall within the 12-36 month range, which is consistent with duration expectations for the industry as a whole. However, 30% of respondents did indicate that duration was a function of the type of case being underwritten, with certain case types (patent, international arbitration, etc.) having longer durations and appeal cases having shorter durations. 
Co-Investment Structuring In terms of insight into how these co-investment transactions are typically structured, the responses varied. In the ‘other’ category, some respondents indicated they have used a variety of the choices offered, whereas one respondent stated that they received a specified interest in the profits produced by the investment. 
Current Co-Investors As it relates to where the current co-investment opportunities are being offered, the majority were offered to other funders, suggesting there is a fair amount of cooperation in the litigation finance marketplace. However, within the ‘other’ category, most respondents suggested it was a combination of all of the choices listed. 
This brings to a close the results of our first commercial litigation finance co-investment survey. 
Edward Truant is the founder of Slingshot Capital Inc. and an investor in the consumer and commercial litigation finance industry.
Edward Truant is the founder of 
