Ellison sets up class-action association to help schemes access cash

Former chairman of the National Association of Pension Funds Robin Ellison has launched a group to help pension funds and investment managers recover their “fair share” of security class actions.

The International Institutional Tort Recovery Association will allow pension funds and investment managers to join the Europe-wide group to take part in the lawsuits.

Security class actions have been part of the US legal landscape for 30 to 40 years and cover investment fraud and misrepresentation.

Ellison said UK pension funds have been wary of taking part in the past, but could be missing out on their share of pay-outs.

Ellison told PP: "There's money on the table and the problem with money on the table is if you don't claim it the other guys get it. For instance with three people - A, B and C - if C doesn't claim it A and B get the extra. So you might as well put your claim in if there's money on the table."

He said the iiTRA would bring some respectability to the lawsuits and would not pursue "specious cases", but members would benefit through collective access to lawyers and case knowledge.

Ellison said the group was an exercise in corporate governance, arguing that pension funds should push for action when they find a company is misbehaving.

He said: "In America the shareholders have no vote and that's why as a corporate governance exercise they use litigation more than they do here."

The iiTRA chairman said he hoped four or five pension funds or investment managers would join the association in the first year, reaching a couple of 100 by 2017 or 2018.

He said it would be beneficial for pension funds with more than a billion pounds under management.

Membership will cost between £25,000 and £100,000 a year depending on the size of the fund but Ellison said schemes could expect to recover £100,000 up into the millions.

In 2011 settlements of class action cases in the US alone topped £100bn.