A class action has been initiated in the Federal Court by 50 former clients of Bell Potter Securities over the company’s alleged conduct with respect to the purchase of shares in a Brisbane biotechnology company, Progen Pharmaceuticals.

The former clients are being represented by law firm Slater & Gordon, which has said it will be alleged to the court that Bell Potter manipulated the market in Progen shares and engaged in misleading and deceptive conduct when it encouraged clients to buy the overvalued shares ahead of and subsequent to Bell Potter being a co-underwriter of a Progen capital raising.

Slater and Gordon solicitor Van Moulis said it was being alleged in the class action that reports published by Bell Potter analysts improperly inflated the value of Progen stock and were then used by brokers to promote the stock to clients.

He said investors were seeking compensation from Bell Potter for their share trading losses, legal costs plus interest.

Bell Potter has indicated it will be vigorously defending the claim.