Opes Prime client loses first round of court battle

In a blow to Opes Prime clients hoping to recover shares lost when the broker collapsed, the Federal Court’s Justice Ray Finkelstein has ruled against a submission by investment company Beaconwood that ANZ should return the shares Beaconwood had lent to Opes.

The move is a boost for ANZ, which seized more than $700 million worth of shares from Opes Prime after the broker collapsed last month. ANZ has been selling the shares to recover a $616 million loan it made to Opes Prime.

Finklestein rejected Beaconwood’s argument that it was an unsophisticated investor and did not understand the Australian master securities lending agreement used by Opes Prime. “Beaconwood borrows for, and invest millions of dollars in, share trading. It does not qualify as an unsophisticated investor,” Finkelstein said.

The case will continue on other legal points, but the ruling is a blow to other Opes Prime clients – including a host of small and medium cap executives, such as former Destra chief executive Domenic Carosa – who may have hoped to launch legal action of their own to recover shares lost in the collapse.