A group of investors in Ross Asset Management are suing the ANZ Bank, claiming it allowed the failed investment company to operate unlawfully.
The group says the bank either knew or should have known that Wellington financial adviser David Ross was operating a Ponzi scheme.
His company collapsed in 2012 and he was sentenced to 10 years and 10 months in jail after admitting the fraud, which overstated client funds by $380 million. About 700 investors were owed $115m, and the liquidators have taken action to recover money from investors who got out early with large gains.
In April, the Supreme Court dismissed an ANZ move to stop the Financial Markets Authority (FMA), which had investigated the collapse, passing on information to investors.
"Since receiving the FMA's material we have sought our own independent analysis and legal advice. This confirms that we have a very good claim against ANZ and we are now proceeding with legal action," group spokesperson John Strahl said.
The Ross Asset Management (RAM) collapse was one of the biggest in the funds management industry. It operated as a Ponzi scheme, in which funds from new investors were used to pay out other investors, rather than being properly invested.
The investors' group said ANZ should have known Ross was acting unlawfully by not holding client funds in separate accounts as required by law.
"The ANZ did not require this and allowed the funds being deposited to be used for non-investment purposes, including paying RAM expenses, reducing RAM's unauthorised overdraft with ANZ and also to repay other investors," the group said.
The FMA investigation concluded that the ANZ bank might be open to legal action by the investors.
FMA chief executive Rob Everett said it had done its job by allowing the investors to get to the stage of being able to take legal action.
"This matter raises important questions around bankers' duties and we are pleased they will now be tested in the court."
The action is being funded by a firm specialising in class actions, LPF Group, on a no-win no fees basis.
The group said more than 200 people have signed up for the action.
In a statement, ANZ said it too was misled by Ross.
A spokesperson said the bank strongly denied the allegations and will be defending the investors' claim.