Eddy Groves launches $10 million legal claim against broking firm

Eddy Groves, the founder of collapsed childcare giant ABC Learning Centre, has launched a $10 million legal claim against listed stockbroker Austock, claiming the broker’s failure to execute a sell order caused him to lose money.

Austock announced the legal claim to the Australian Securities Exchange last night.

It says it has received a letter of demand from Groves alleging that on February 27, 2008, Groves gave an order to sell about five million shares in Austock at market price, but the order was not executed.

Groves claims he suffered $10 million worth of losses as a result, including losses of $5.5 million on subsequent sale of his private helicopter and luxury yacht in September 2009.

“Austock is seeking external legal advice before responding to the claim. Mr Groves has not yet issued legal proceedings,” the company said in a short statement.

The letter of demand from Groves would appear to be related to another legal case, in which Groves’ former brother-in-law Frank Zullo took action against Groves over the repayment of an $8 million loan. It is believed the parcel of Austock shares was used as a security for that loan.

The legal claim also underlines the complete break-down in relations between Groves and Austock.

The broker was a key adviser to ABC on its float in 2001, and helped advise the company as it went on its acquisition spree throughout the 2000s.

The company’s also shared a director; Austock chairman Bill Besseer was an ABC director.