Widow to take on Tweed in court
Ben Butler
January 30, 2012

THE business practices of the sharemarket bottom-feeder David Tweed are to be tested in court by a 77-year-old widow in a case that could damage his ability to enforce contracts signed by his victims.

Annelott Gerandt is fighting a demand for $35,000 from Mr Tweed's company, Direct Share Purchasing Corporation, in the Melbourne Magistrates Court.

Mr Tweed demanded the money after Ms Gerandt refused to hand over $70,500 worth of units in the Colonial First State Mortgage Income Fund, saying she didn't understand the contract she signed with DSPC.

While other courts have ruled against some of Mr Tweed's practices, he continues to press his claims in the Magistrates Court, where he has 20 open cases against individuals.

In a landmark ruling last year, the NSW Supreme Court found that fund manager Perpetual did not have to register transfers to Mr Tweed without first double-checking that its clients really meant to sign over their investments.

And Mr Tweed's former business, National Exchange, was also the subject of a Federal Court ruling in 2003 that found an offer to buy shares on extremely unattractive instalment terms was misleading even though it contained ''no specific false statement''.

In Ms Gerandt's case, DSPC offered to pay her half the face value of her units in August 2010. But she says she thought the form she signed was a request from Colonial to pay money into her pension fund account.

''It's awful, they took advantage of something I didn't understand,'' Ms Gerandt said.

Ms Gerandt's case has drawn the support of the law firm Maurice Blackburn, which is defending her pro bono. The case has also sparked inquiries by the Legal Services Commissioner, which investigates allegations of conduct against lawyers, into the behaviour of DSPC's lawyers. A solicitor acting pro bono for Ms Gerandt referred the behaviour of Mr Tweed's lawyers, EC Legal, to the Legal Services Commissioner last year after writing to the firm rejecting DSPC's threat to take legal action.

''Because of the unsavoury nature of this claim I am referring your client company's actions to [corporate regulator] ASIC for investigation,'' the lawyer said in the letter to EC Legal. ''I am also referring your legal practice's involvement to the Legal Services Commissioner for consideration.''

It is believed that the Legal Services Commissioner is still examining EC Legal's role. EC Legal could not be reached for comment.

Ms Gerandt's case is set for trial on April 12 and 13.