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Charity sues financial advisor for $1.5m GFC loss
A prominent WA charity could is suing its financial advisor after it lost $1.5 million during the global financial crisis.
Senses Foundation, which supports deaf and blind people, claims investment company Counterpoint breached its duty of care and engaged in misleading and deceptive conduct while handling the charity's funds during 2005-2007.
Its Federal Court case also implicates Counterpoint's former director Peter Williamson.
The money - which would have been used to support disabled West Australians - disappeared when Basis Capital Funds, linked to the US sub-prime market, collapsed in 2008.
Senses Foundation's lawyer Mark Walter, from Slater & Gordon, said the charity had relied on Counterpoint's expert advice to manage its investments.
"Senses Foundation trusted Counterpoint to invest the money safely and wisely so that the charity could continue to meet its future operating costs
and the needs of its clients," he said.
"However a recommendation was made that saw the charity investing its money into Basis Capital Funds that was linked to the US sub-prime debt market and the fund later collapsed."
"Senses Foundation would never have placed the money with Counterpoint if it had been told that its investment in Basis Capital Funds was high risk and volatile. It wasn't informed of that and as a result, it suffered significant losses.
"Counterpoint ought to have known that this was a completely unsuitable, high risk proposal for a charity, and that the money should have been invested in a more appropriate manner."
Mr Walter said it was not until Senses received a letter two years later, advising that Basis Capital Funds had collapsed, that it realised it had invested in a high risk fund.
Senses chief executive officer Debbie Karasinski said it was devastating for the organisation.
"We were clear in our instructions to the adviser that Senses funds were to be managed with the aim of providing a secure income stream to the Senses Foundation and to avoid high risk for high return investments," she said.
"Clearly the advice we received, and accepted at the time, was linked to an investment that was outside the parameters of our clearly enunciated investment strategy."
Litigation fund LCM have financially backed the legal action. LCM already has successfully recovered money for several clients whose advisors had invested in Basis Capital Funds.
"The decision to litigate is not made lightly, but our clients and LCM believe Counterpoint has a case to answer," Mr Walter said.
A prominent WA charity could is suing its financial advisor after it lost $1.5 million during the global financial crisis.
Senses Foundation, which supports deaf and blind people, claims investment company Counterpoint breached its duty of care and engaged in misleading and deceptive conduct while handling the charity's funds during 2005-2007.
Its Federal Court case also implicates Counterpoint's former director Peter Williamson.
The money - which would have been used to support disabled West Australians - disappeared when Basis Capital Funds, linked to the US sub-prime market, collapsed in 2008.
Senses Foundation's lawyer Mark Walter, from Slater & Gordon, said the charity had relied on Counterpoint's expert advice to manage its investments.
"Senses Foundation trusted Counterpoint to invest the money safely and wisely so that the charity could continue to meet its future operating costs
and the needs of its clients," he said.
"However a recommendation was made that saw the charity investing its money into Basis Capital Funds that was linked to the US sub-prime debt market and the fund later collapsed."
"Senses Foundation would never have placed the money with Counterpoint if it had been told that its investment in Basis Capital Funds was high risk and volatile. It wasn't informed of that and as a result, it suffered significant losses.
"Counterpoint ought to have known that this was a completely unsuitable, high risk proposal for a charity, and that the money should have been invested in a more appropriate manner."
Mr Walter said it was not until Senses received a letter two years later, advising that Basis Capital Funds had collapsed, that it realised it had invested in a high risk fund.
Senses chief executive officer Debbie Karasinski said it was devastating for the organisation.
"We were clear in our instructions to the adviser that Senses funds were to be managed with the aim of providing a secure income stream to the Senses Foundation and to avoid high risk for high return investments," she said.
"Clearly the advice we received, and accepted at the time, was linked to an investment that was outside the parameters of our clearly enunciated investment strategy."
Litigation fund LCM have financially backed the legal action. LCM already has successfully recovered money for several clients whose advisors had invested in Basis Capital Funds.
"The decision to litigate is not made lightly, but our clients and LCM believe Counterpoint has a case to answer," Mr Walter said.