Young Investment Group v QBE – the West Australian
Insurer QBE has been told to pay out $11.2 million to a WA sharemarket investor stung by a dodgy stockbroker more than 10 years ago.
The investor, Beverley Margetts, was a client of disgraced Stripe Capital broker Todd King, who was jailed for two years on a separate matter in 2014 for stealing.
King, who has since been permanently banned from the financial services industry, was an authorised representative of Australian Stockbroking & Advisory Services, which was insured with QBE.
Ms Margetts’ three investment companies — Young Investments Group, Rastus Group and Reid Park Investments — took King, Stripe and ASANDAS to the Federal Court in 2009, claiming breach of duty and breach of conduct in relation to unauthorised trading by King and Stripe which incurred millions of dollars in losses.
The court found in their favour in 2013, but ASANDAS was deregistered three years later.
Ms Margetts subsequently sued QBE directly in the Supreme Court.
The insurer denied liability on two grounds, including that King’s unauthorised trading negated its insurance policy.
However, Justice Peter Quinlan today ruled that Ms Margetts’ companies were entitled to the full $10 million limit of indemnity under the QBE policy.
Interest accrued from 2016 took the full judgment up to $11.2 million.
Ms Margetts took Stripe on as a financial adviser in 2007. In her Federal Court statement of claim, she said that between 2007 and 2008, Stripe bought and sold shares on behalf of her three companies without authorisation for the purposes of inflating its commissions.