Class action lawyers circle troubled Magellan

Investors and analysts were blindsided by the loss, given Mr Douglass had told this masthead earlier this month that no institutional clients had raised questions about the fund’s performance during a recent work trip to Europe and the UK.

In all three developments, Mr Scattini said shareholders should have been better informed.

“You can understand the motivation for not wanting that to come out. You can understand why you would want to put the best gloss on things, but that’s not the rule for a very good reason,” he said.

“The market doesn’t work if you can just make judgements in your own interests.”

A spokesman for St James’s Place said on Monday global investment giant State Street Global had already taken over the mandate. Mr Scattini said it was unlikely Magellan first learnt of this last week.

“Unless you’re Emmanuel Macron, you would not expect to get a text the night before to say it’s over,” Mr Scattini said, referencing the Aukus security pact fallout between Australia and France. “I would be very, very surprised if that was totally out of the blue. It just doesn’t happen.”

In the case of the marriage breakdown, both lawyers agreed investors do not need a “blow-by-blow” account of intimate details. “But there is a risk of the shares being diluted, and tossed onto the market, that has to be something,” Mr Scattini said.

Mr Douglass sent a memo to staff on Monday that sought to allay fears about ongoing value destruction, claiming Magellan was a “very strong business that is very diversified”.


“Our largest client relationship now represents only around 3 per cent of our revenues, and we have over 150 institutional relationships around the world and relationships with thousands of financial advisers,” Mr Douglass wrote in a letter co-signed by interim chief executive Kirsten Morton.

“Our employees and our clients are our highest priority and our privileged financial position allows us to continue to invest, support, reward, and innovate. This will not change,” the letter said.

However, the letter, that was distributed to certain media outlets, failed to impress investors. Morningstar released a note on Tuesday to clients slashing Magellan’s valuation by 25 per cent. The company’s stock rose 4.4 per cent on Tuesday to $20.56 per share, but still hovering at a five-year low.

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