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National Australia Bank faces claim of $450 million in class action

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A class action has been issued in the Supreme Court of Victoria by over 250 shareholders seeking losses in excess of $450 million from the National Australia Bank (“the NAB”).

The claimants are investors who purchased shares in the NAB during the period 1 January 2008 to 25 July 2008. It is alleged that the NAB failed to comply with its obligations under the Corporations Act to disclose to shareholders and the market at large, information that may materially affect its share price; that is, information that would influence investors as to whether or not they bought or sold NAB shares.

The “information” that is alleged to have been withheld by the NAB is its exposure to losses arising from Collaterised Debt Obligations (“CDOs”) linked to the the United States sub-prime market collapse. Whilst provision for losses of $181 million were made and reported in May 2008, this jumped to $830 million by July that year. The share price fell by over 12% in the days that followed. It is alleged that the NAB should have released details of its exposure as early as 2007.

The NAB has publicly stated that it will “vigorously defend” the claim.

Class actions (known as “representative proceedings”) were initially introduced to provide access to justice for people who may otherwise be unable to afford to pursue their claim if they had to do so alone. However, it is now common for class actions to be brought by large companies.

To be able to commence a class action there must be at least seven people with claims against the same person. The claims must give rise to a “substantial common issue of law or fact”.

The person that commences the class action must describe the class of people being represented. They can do this without knowing who may actually fall into the class. Individual members of the class can “opt out” of the class by filing a Notice with the Court.

Our Dispute Resolution & Litigation team has acted in various class actions. In some cases, where there have been less than the required number of claimants, litigation has been successfully run on behalf of the remaining individual claimants. We invite any reader who believes they may have a claim to contact us to discuss the options available.

Author: Kaye Griffiths

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