Investors in the failed insurance group CBL Corporation have accused its former directors of misleading statements, failure to disclose key information, and insider trading in papers just filed in court.
CBL Corp failed in 2018 when its insurance subsidiary was forced into liquidation by the Reserve Bank, and overseas regulators moved against other operations.
The group was a sharemarket high flyer after its listing in 2015 and was worth almost $750 million when it collapsed.
Major shareholders in CBL Corp, Harbour Asset Management and Argo Investments, have now lodged a class action in the High Court against the company and its former directors, Peter Harris and Alistair Hutchison, claiming maximum compensation for their losses.
"Shareholders globally lost hundreds of millions of dollars when CBL collapsed. The directors must be held to account for their actions and shareholders compensated for their losses," Harbour's managing director and chair of the class action claim committee Andrew Bascand said.
He said the CBL directors misled investors in documents for the sharemarket listing when they said the company had adequate financial reserves to meet its insurance obligations.
"The claim also alleges that directors are responsible for the company failing to update the market in the period after the IPO (initial public offer) with material information about CBL's financial position."
The insider trading claim alleged Mr Harris and Mr Hutchison sold shares in CBL through other companies they owned while they knew material information unknown to other investors.
The class action was backed by the litigation funder LPF Group.
CBL Corp's liquidation was delayed for a year as its directors asked for time to devise a restructuring plan but became inevitable when its mainstay insurance arm collapsed following regulatory action by the Reserve Bank.
The CBL Insurance company's net liabilities have been put at somewhere between $25m and $343m.
"We believe legal action is the only way investors in CBL can get any money back," Mr Bascand said.
The Financial Markets Authority and the Serious Fraud Office are still investigating the CBL Group.
Mr Harris has been approached for comment.