FNZ employee shareholders claim an early win

Employee shareholders of FNZ, who have filed a US$4.6 billion class action against FNZ Group and 17 of its current and former directors, claim to have secured an early victory.

FNZ and its co-defendants' many counsel lodged seven separate memoranda and two affidavits to halt the court proceedings.

However, the New Zealand High Court judge rejected FNZ's motion to stay the proceedings, describing the memoranda as falling like snow on the Registry. The judge agreed with the single memorandum lodged by the employee shareholders.

This is a significant win for the employee shareholders, who allege that conflicted directors deliberately transferred wealth away from them to the same institutional and private equity investors they represent.

Despite these attempts of procedural legal challenges, the employee shareholders remain undeterred, they say in a statement.

"We foresaw this strategy and are well prepared for FNZ doing everything in their power to prevent this from going to the High Court – including trying to bury it in technical minutiae. Seven memoranda and two affidavits later, the case has not been stayed as sought by FNZ and we hope to get back to the merits under the New Zealand Companies Act 1993, which protects minority shareholders.

"This is not a game of technicalities. It is a case about directors' duties, oppressive conduct and a deliberate transfer of value. And a snowstorm of memoranda is not a defence; it is an attempt to stop the merits being heard. It could even be seen as an admission that those merits will cause them a problem.

"These developments represent another step towards justice," an employee shareholder spokesperson said.

Hundreds of Class B employee shareholders have now joined the class action, and with further legal success, the case may expand to include other employee shareholders, which could see thousands of employees take action against FNZ, the shareholders say.

A spokesperson for FNZ said: “FNZ notes the claim filed in New Zealand and considers it to be entirely without merit. We are confident that our directors have at all times acted in the best interests of the company, its clients, employees and all stakeholders."

"The investments by FNZ’s institutional shareholders reflect a strong commitment to the company’s long-term growth and success, an outcome that can only be in the best interests of all its stakeholders.”