As previously discussed here, a recent court decision by Australia’s Federal Court in the Brookfield Multiplex Limited case essentially stopped the litigation funding industry in its tracks when it found that funding arrangements and solicitors’ retainer for representative proceedings constituted an unregistered Managed Investment Scheme in breach of the Corporations Act 2001 (Cth). The effect of the ruling was wide-reaching given the many securities class actions pending before the Australian courts that are backed by litigation funding on terms similar to those present in the Brookfield case.
Yesterday, The Age reports, the Australian Securities and Investments Commission remedied this problem as relates to existing cases by ordering that class actions begun by the close of business yesterday are excused from the impact of the Brookfield decision. ”The relief will allow time for the Government and ASIC to consider and consult on how funded class actions should be regulated under the act in future,” it said.
