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The ANZ Banking Group, parent of ANZ National - New Zealand's biggest bank - is being sued in a United States class action over its exposure to failed brokerage house Opes Prime Group.
American law firm Vianale & Vianale said yesterday it had filed a class action lawsuit on December 29 on behalf of purchasers of the ANZ's American Depository Receipts during the period of March 2, 2007 to July 27, 2008.
The law firm alleged the company and its top executives violated federal securities law and failed to adequately disclose the range of risks arising from its loans to Opes Prime.
ANZ appointed receivers to Opes Prime after irregularities were discovered in the broker's trading accounts in March.
Opes Prime owed around $1 billion, backed by listed securities, to ANZ and Merrill Lynch.
The bank recovered most of the money owed to it by selling the securities but suffered bad publicity.
A spokesman for ANZ said it would strongly defend the case.
"The Opes Prime matter is subject to a range of legal actions that we will be vigorously defending," said Paul Edwards, a Melbourne-based spokesman for the bank.
ANZ sacked eight workers in August after an investigation into the bank's lending to Opes Prime.
In October, ANZ more than tripled bad loan provisions for fiscal 2008 to A$1.95 billion ($2.3 billion).
But Edwards said while the Opes Prime matter had hurt its reputation in a financial sense the matter was not material and no financial loss had been incurred.
ANZ shares lost 39 per cent over the period specified in the suit, and have tumbled 44 per cent this year.
According to its website, Vianale & Vianale "focuses on securities litigation on behalf of individual shareholders and public pension funds
who have suffered losses to their securities investments through the fraud or mismanagement of corporate executives and the public companies they run".
Vianale & Vianale said the action was pending in the Manhattan Federal Court.
- ADDITIONAL REPORTING: AGENCIES
