Income Asset Management Group (ASX: IAM) has entered into a mediated commercial settlement agreement with BGC, resolving all disputes related to five IAM staff members in litigation that commenced in 2020. The settlement requires payment by IAM of $1.9 million, due by the end of April 2026, without admission of liability.
The disputes related to the engagement in 2020 of five employees who previously worked at BGC. IAM’s staff were the original defendants in the proceedings, with IAM joined to the litigation in February and April 2024. IAM and its employees have always denied any wrongdoing.
IAM agreed to settle having regard to the cost, distraction and uncertainty associated with continued litigation. The five individuals involved are senior members of IAM’s management team who play critical roles within the business.
They have been instrumental in building the franchise now in place and are considered key leaders of the company’s future.
Why litigation settlements matter for small-cap investors
Ongoing legal disputes create multiple challenges for small-cap companies and their shareholders. Protracted litigation consumes both financial resources and management bandwidth, diverting attention from strategic initiatives and operational execution.
For investors, unresolved legal matters introduce valuation uncertainty, as potential liabilities remain difficult to quantify until finalised.
Legal costs can accumulate substantially over multi-year proceedings, particularly when complex commercial disputes require extensive documentation, expert witnesses and court time. Beyond direct legal expenses, litigation creates an intangible drag on share prices as investors apply a discount to account for unknown outcomes.
Settlement without admission of liability is standard commercial practice. Companies often conclude that the certainty of a defined payment outweighs the risks and costs of continued court proceedings, regardless of their confidence in their legal position.
The removal of litigation uncertainty represents a clearing event, eliminating a persistent concern that may have suppressed valuation multiples.
Settlement terms and financial impact
The mediated agreement requires IAM to pay $1.9 million to BGC by the end of April 2026, resolving any claims and all proceedings between the parties and IAM’s staff. The settlement includes no admission of liability, with remaining terms held confidential.
IAM has notified its insurer in relation to the settlement and will continue to work constructively with the insurer in respect of its claim under its insurance policies. Discussions with the insurer regarding separate insurance claims arising from historic and previously disclosed fraudulent activity are also ongoing.
| Item | Detail |
|---|---|
| Settlement Amount | $1.9 million |
| Payment Deadline | End of April 2026 |
| Admission of Liability | None |
| Insurance Claim Status | Notified insurer, discussions ongoing |
| Other Terms | Confidential |
The settlement amount represents a manageable obligation for the company, with payment not required until April 2026. This timeline allows IAM to manage the payment through normal business operations whilst pursuing insurance recovery options.
Substantial shareholder backs the company with liquidity facility
Director and substantial shareholder Jim Simpson has offered a specific use unsecured liquidity facility to ensure appropriate liquidity is available when the settlement payment falls due. The facility will only be utilised if deemed necessary by the Board at the time payment is required.
The Board stated it anticipates the facility will not be required, preferring to use existing company funds for the settlement payment. However, the Board may elect to drawdown the facility if required.
Mr Simpson’s willingness to provide this backstop facility signals confidence in IAM’s financial position. Substantial shareholders typically extend such support only when they believe in the company’s underlying strength and ability to meet obligations through regular operations.
“The Board appreciates Mr Simpson’s support in providing certainty that the Company will meet this obligation however anticipates the facility will not be required and prefers to use existing Company funds, the Board may elect to drawdown the facility, if required.”
Key personnel retained as IAM looks forward
The five employees involved in the dispute are senior members of IAM’s management team who play critical roles within the business. These individuals have been instrumental in building the franchise now in place and are considered key leaders of the company’s future.
Both the employees and IAM are pleased to put these matters behind them.
Retaining this senior talent represents a significant positive outcome from the settlement. Experienced personnel with established client relationships and deep market knowledge form the foundation of asset management businesses.
The settlement secures several important outcomes for the company:
- Legal uncertainty removed after approximately five years
- Senior management team remains intact
- No admission of liability by IAM or staff
- Insurance claim notified for potential recovery
- Liquidity backstop facility in place if required
- Management bandwidth returns to core operations
With disputes resolved and key personnel committed to the business, IAM can direct full attention to serving clients and growing its platform.
Next steps and timeline
The settlement payment of $1.9 million falls due by the end of April 2026. During this time, the company will continue constructive discussions with its insurer regarding the settlement claim and separate insurance matters related to previously disclosed fraudulent activity.
The Board’s stated preference to use existing company funds rather than the Simpson liquidity facility indicates confidence in the company’s cash generation over the coming quarters.
Income Asset Management aims to provide investors, advisers and portfolio managers with the most capable platform to research, execute, and manage their income investments. With more than $2 billion funds under administration, the business covers a broad spectrum of income investments including bonds, loans, and treasury management services.
The resolution of this long-running dispute removes a persistent overhang, allowing investors to assess the business based on operational performance rather than legal uncertainty.
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