Cba Delighted As Tweed Walks Away From Court Case And Pays Costs

The Age

Thursday December 9, 2004

LEONIE WOOD

SHARE scammer David Tweed has abandoned his court bid to sue Commonwealth Bank for up to $80 million, and has agreed to pay $400,000 to the bank and share registry group ASX Perpetual Registrars.

The surprise capitulation came on Tuesday evening just hours after counsel for CBA, Neil Young, QC, told the Federal Court that the bank believed Mr Tweed's below-market offers were misleading and deceptive, unconscionable and illegal. But there was another surprise yesterday when Justice Ray Finkelstein revealed that the Australian Securities and Investments Commission had contacted his office on Tuesday evening and asked for copies of the affidavits sworn by Mr Tweed during the case.

It is not clear why the corporate regulator wants the Tweed-CBA affidavits.

ASIC on Monday is due to front Justice Arthur Emmett in the Federal Court in Sydney and allege that below-market offers that Mr Tweed's company, National Exchange, recently sent to shareholders of aged-care provider Aevum were misleading, deceptive and unconscionable.

Aevum asked the corporate regulator to join the case several weeks ago, but it was not until November 19 - the day Justice Emmett issued an injunction against National Exchange - that ASIC formally applied to be joined as a party.

As well, Mr Tweed tomorrow will ask the High Court for special leave to appeal decisions in the Federal Court, which has ruled that offers he made to shareholders of OneSteel in 2003 were misleading and deceptive. ASIC will oppose the application.

In Melbourne, Mr Tweed had tried to sue CBA and its share registry, claiming they thwarted his plan to send below-market offers to shareholders by delivering him an electronic version of CBA's share register that could not be copied, pasted, manipulated or searched.

Mr Tweed claimed he could have made anything from $2 million to $80 million depending on the level of CBA acceptances. But after five days of evidence, he walked away from the case just as closing submissions were about to begin. He agreed to pay $200,000 towards CBA's costs and $200,000 to ASX Perpetual.

CBA yesterday said it was "absolutely delighted" that, by consent, National Exchange had agreed for judgement to be made against it in Melbourne.

"At all times, the bank has acted so as to protect the interests of its shareholders," CBA chief executive David Murray said. "In doing so, the bank maintains that it had complied with the law in all its dealings with National Exchange."

Mr Murray also raised concerns about what he called "inappropriate use" of share registers, where the register might be used for purposes other than shareholder matters or "for the advancement of sectional interests".

During two days of cross-examination, Mr Tweed revealed he made profits totalling about $10 million by buying shares in AMP, IAG, AXA Asia Pacific and OneSteel in 2003 for well below their market value, from unwitting investors, and then selling them on the sharemarket.

Laws were changed last year that forced Mr Tweed's companies, National Exchange and National Exchange Corporation, to reveal the market price in his unsolicited offers, but Mr Tweed told the court that when the laws were changed he devised new formats for his offers.

For example, instead of telling investors how much they would get for each share, he used a description that included only a total sum, or he offered to pay in instalments over 15 years.

© 2004 The Age

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