Graham Rich has finally reached a settlement with Morningstar of the US, the Australian arm of which he founded 24 years ago, with the US company agreeing to pay him $4 million plus some costs after a six-year legal battle.

Rich was ousted from the company in 2001, after Morningstar had increased its shareholding to about 60 per cent, but the US parent refused to make him an offer for his shares. Rich filed law suits both for wrongful dismissal and oppression of minority shareholder interests. The settlement also includes a gag clause preventing the parties from speaking publicly about the matter. It is thought that the whole affair has cost Morningstar at least $12 million. A court filing earlier this year included an estimate of Australian legal costs for the company of $6.8 million, at the time. The suit gets a whole page of coverage to itself in the Morningstar annual report in the US, for the year to December last. Rich brought Morningstar, which is now the largest provider of retail managed fund data, to Australia in 1999, investing alongside his original research firm, FPG Research. With Morningstar, Rich introduced fund star ratings to Australia. He aggressively expanded the business and took the mantle of most widely used research firm from the former Assirt (now S&P). After his dismissal Morningstar moved to reduce costs in its Australian subsidiary and consolidate its position. It subsequently acquired the business of Aspect Huntley, which includes the media outlets Investor Daily, IFA magazine and Investor Weekly. Rich currently runs his own boutique publishing firm, brillient!, which includes the Portfolio Construction Forum activities. In a statement this morning he said: “I’m pleased to finally bring this matter to a reasonable conclusion.”

Leave a comment