Many of Australia's largest financial institutions and several thousand retail investors participated in the case. Many received substantial damages.
The settlement followed the trial of the class action in October 2007.
Maurice Blackburn commenced the Aristocrat class action in November 2003. The class action was on behalf of all shareholders who acquired an interest in shares in Aristocrat between 19 February 2002 and 26 May 2003 and who suffered loss as a result of Aristocrat's conduct alleged in the Statement of Claim.
The class action alleged that Aristocrat's reported profits for 2001 and the first half of 2002 were overstated because they were based on recognition of revenue from some large South American sales in breach of accounting standards. The claim also alleged that, in breach of its ASX continuous disclosure obligations, Aristocrat did not inform the market that it was unlikely to achieve its 2002 profit forecast. When the true state of Aristocrat's business was announced in February 2003 its share price dramatically plunged from $4.45 to $1.82.
The class action alleged that shareholders who purchased shares in the relevant period suffered losses by purchasing shares at inflated prices because the market was not properly informed of Aristocrat's true financial performance.
The Aristocrat Class Action trial ran for four weeks in October 2007. In the course of the trial the Applicant sought to prove its case with approximately 900 documents culled from approximately 110,000 documents of discovered and subpoenaed materials. The Applicant and three expert witnesses gave evidence in support of the case. These experts were a forensic accountant regarding the breaches of standards and the true state of Aristocrat's business, an investment manager regarding the materiality of the information not disclosed and an economist to quantify the inflation paid by shareholders.
Whilst awaiting the judgment, in May 2008 Aristocrat and the Applicant reached a conditional settlement. The Federal Court ordered that a notice be sent to approximately 19,000 shareholders who purchased shares in the relevant period at the addresses recorded on Aristocrat's share register. This Notice advised shareholders of the conditional settlement and that they had until 24 June 2008 to indicate that they intended to participate in the settlement and provide their relevant share trading information.
Following a process of investigation and verification of claims a final settlement of $144.5 million was reached which was approved by the Federal Court on 28 August 2008.
Aristocrat's current management and directors negotiated a responsible settlement of the class action for which they should be credited. The case related to events that occurred in 2001-2003 and the management in place at that time was removed by Aristocrat in 2003.