Judge blasts lawyer over error that torpedoed US case against ANZ

IT MIGHT have been a fat-finger moment, but when a US lawyer typed ''2007'' instead of ''2008'' it earned a blistering rap from a New York judge - and cost him thousands of dollars.

The error proved fatal to a short-lived US class action in which US-based investors in ANZ sued the bank over its public statements regarding the failed Opes Prime share-lending firm, and it led to the class action lawyers paying all ANZ's costs.

The case in New York's US District Court focused on a 17-month period, from March 2, 2007, to July 2008, during which the investors alleged ANZ had issued statements about its financial performance that were misleading because, they claimed, the bank failed to warn them about its exposure to Opes Prime.

The investors claimed that in ''March 2007, in a series of internal emails, executives of ANZ recognised that Opes was in financial difficulties and that, as a result, ANZ's loans to Opes Prime would be in jeopardy''.

In fact, there were no ''internal emails'' about Opes Prime at ANZ in March 2007 - it was fully 12 months later that Opes Prime collapsed, crystallising losses of hundreds of millions of dollars for its clients.

New York District Court judge Denise Cote dismissed the class action case in December but in a recent decision she castigated the lawyers representing the investors, describing their error as ''an act of gross negligence bordering on recklessness''. Judge Cote said the date was ''a material allegation central to the viability of the entire pleading'' and the ''spurious allegation'' had opened up a much longer potential period of claim.

The judge said that, considering how crucial the emails may have been to the investors' ''entire theory of fraud, any reasonable inquiry into the factual basis of the pleading would have prevented this mistake''.

''Such indifference to the truth of the pleading's single most important factual allegation - coming ironically in the context of initiating a lawsuit that accuses another party of making reckless misstatements of material fact - is the sort of conduct that [the US court rules] seek to deter,'' the judge said.

So how did the lawyers pick up the wrong date?

The plaintiff's lawyer, Kenneth Vianale of Boca Raton, Florida, told the court he had read an article published in June 2008 on the Australian online news and commentary site Business Spectator that referred to ANZ emails about Opes Prime dated ''March 7''.

''While [Mr] Vianale does take responsibility for the error, he does not explain how he came to rest his entire case on a misread news article, nor how he came to conclude that the June 2008 article concerned events that occurred a year earlier than a natural reading of the article would indicate,'' Judge Cote said.

Mr Vianale and his firm and lawyer, Jules Brody of New York firm Stull, Stull & Brody, were ordered to pay all ANZ's costs. A confidential settlement was finalised in late June.