‘Plenty of people out of pocket’: ASX outage could trigger class action lawsuit

Market operator ASX is facing a potentially damaging class action lawsuit over a trading outage last month that left investors sidelined for a full day and put trades worth billions of dollars in limbo.

Sydney-based class action specialist law firm Quinn Emanuel Urquhart & Sullivan told The Sydney Morning Herald and The Age it is investigating the ASX trading outage in preparation for legal action on behalf of investors and market participants who say they lost money as a result of the glitch. The law firm is conducting due diligence on a potential case and will then seek litigation funding.

Quinn Emanuel partner Damian Scattini is investigating the ASX for a class action.
Quinn Emanuel partner Damian Scattini is investigating the ASX for a class action.Credit:Michele Mossop

Partner Damian Scattini said he was asked last week by a “small institutional investor” to run the ruler over the ASX to assess a potential action.

Mr Scattini believes there is a strong case as the company’s negligence had caused losses for investors and market participants. Around 1.5 million trades are made on the ASX each day, with an average daily turnover of $4.7 billion, according to Australian Securities and Investments Commission figures.


“It seems like a mess was unnecessarily created and now has had impacts downstream,” Mr Scattini said. “I would imagine there are plenty of people who are out of pocket and irked about it.”

“It seems like a pretty foreseeable problem and they didn’t do anything about it,” Mr Scattini said. “If it’s foreseeable and has caused loss, then you’re called upon to make it good.”

Independent trader Gary Henderson has been trading options for over 20 years and said he would “definitely” join the class action if it eventuates.

“I emailed them on the day of the outage saying these were the trades I could not close out today,” Mr Henderson said. “If I lose on this from overnight moves then I expect compensation as you [ASX] have accepted liability.”

Mr Henderson said he received automated response from the ASX and was provided no avenue to recoup the near $8000 he lost. “I thought ASX being a big company, they would step up, have someone who would assess your claim and try and put things right with people.”

It shouldn’t take very long, this one seems pretty clearly what we call a ‘screw up’.

Quinn Emanuel partner Damian Scattini

The ASX suffered its third major outage in nine years in mid-November due to a botched upgrade of ASX Trade. ASIC is now probing the company for potentially breaching its legal obligations to run a fair and transparent market.

Mr Scattini said the due diligence process could take a couple of weeks and it is possible the ASX could be served with a writ by the end of the year. “It shouldn’t take very long, this one seems pretty clearly what we call a ‘screw up’.

“We are fast running out of year, but it could be,” Mr Scattini said of a class action launched before Christmas.

The ASX said it had not been notified of any class actions, did not accept any negligence for the trading outage and would not consider compensating investors who lost money as a result.

Options traders and brokers have expressed anger with the ASX’s handling of the outage, claiming key systems are still down and the level of communication from the company has been poor.

Morningstar analyst Gareth James and Ord Minnett chief executive Karl Morris said the ASX’s under-investment in technology was a result of its monopoly status in the market.

Shares in ASX Limited closed 0.67 per cent higher at $77.72.

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Source: Thanks smh.com