A Dublin law firm is seeking information on how one of Anglo Irish Bank's largest property funds was marketed and sold to investors after its value crashed by 97pc over the last two years.
Investors in the Anglo Irish European Geared Property Fund have been asked by the firm to come forward to provide information on its workings. The law firm, LKG Solicitors, already represents some of the clients in this fund.
According to its latest investor update, the fund has fallen by 97pc since a December 2009 valuation.
A large number of the properties in the fund are co-owned with joint venture partners, many of whom are well-known Anglo developer clients.
Some €172m was raised for the fund, with Anglo customers told that the vehicle was a chance for them to avail of Anglo's "expertise" in sourcing and managing geared property investments.
LKG Solicitors is also seeking fresh information about another fund, the Select Geared Property Fund, which unsuccessfully tried to raise €255m just before the property crash.
The firm wants to know why one property that was scheduled to go into the Select fund was later put into the European fund.
"LKG Solicitors represent clients who have concerns regarding Anglo's management of the European Geared Property Fund and the properties acquired by the fund. There are also concerns relating to a property originally proposed for the Select Geared Property Fund but bought by the European Geared Property Fund some time later,'' states an advertisement placed in today's newspaper by the firm.
Anglo has strongly refuted suggestions of any impropriety. In a statement, it said: "Both the Select Geared Property Fund and the European Geared Property Fund were marketed in a fully transparent way. Anglo's roles were fully disclosed in all promotional materials which were provided to all potential investors.
"All investors have had and continue to have the right to come into the bank and review documentation related to the funds."
LKG is also investigating the provision of investment/financial advice and loans by Anglo's wealth management unit in relation to the two funds. Whether the funds complied with prospectus laws is also being examined.
The action by the firm and its clients is just the latest example of Anglo having to defend its previous lending decisions. Anglo now has one of the largest annual legal bills of any bank as it defends suits in Ireland and the US.
A group of Irish investors is already suing the bank over two hotel deals it did with private clients at the height of the boom in New York.
It was also revealed last week that David Drumm, the ex-chief executive of the bank, is being pursued by a group of investors in a separate action.