Shareholders of QBE Insurance Group Limited have lodged legal proceedings to hold the company to account over its share price collapse in December 2013, with Maurice Blackburn Lawyers today officially filing a shareholder class action against the insurance giant.
The class action case has been lodged in the Federal Court in Melbourne, with close to 700 clients already registered for the class action that will seek to recover more than $200 million in compensation for shares purchased at inflated prices.
After calling a trading halt on Friday 6 December 2013, QBE stunned the market on Monday 9 December 2013 when it announced it was expecting to post a loss of US$250 million for FY2013.
The market responded by wiping $4 billion off the market value of QBE in a day, with the stock plummeting by 22.3 per cent the day the announcement was made, closing $3.45 down at $12 – the biggest single day fall for QBE in the 12 years preceding it.
The stock continued to fall the following day, shedding another $1.18 to $10.82. In total, QBE shares fell 30 per cent over two days.
When confirmed in February 2014, the reported loss of US$254 million was the first loss for the company since 2001, coming on the back of analysts’ expectations of a $1 billion-plus profit.
Class Actions Principal at Maurice Blackburn, Jacob Varghese, says the firm has now investigated allegations that QBE breached its continuous disclosure obligations by not informing the market of the losses sooner, and is prepared to take the matter to trial on behalf of aggrieved investors.
“We have been approached by shareholders concerned that QBE was less than frank and timely in informing the market of the troubles in its North American business, which were at the heart of the 2013 surprise loss,” Mr Varghese said.
“If QBE has breached its obligations or misled the market, investors that bought QBE shares in the period leading up to 9 December 2013 paid an inflated price for those shares. Those investors will be entitled to compensation.
“Shareholder class actions are an essential part of Australia’s corporate governance landscape. They are an important mechanism for investors to make themselves heard in the boardroom.
“Full and honest disclosure is a small price to pay for access to the superannuation and life savings of Australians.
“The vast majority of Australian companies are conscientious about their disclosure obligations. But to keep the market fair for those that do play by the rules, we all have an interest in penalising the ones that don’t. Our class actions do that.”
The lead plaintiff is the self-managed super fund of Richard Bungey, a 69-year-old semi-retired small business owner from Queensland. Mr Bungey bought 1300 QBE shares in October 2013, just months before the share price collapse, which he says has taken a financial and emotional toll on him and his family.
“The purchase of QBE shares was part of an investment plan to secure my financial future into retirement. Instead, I have lost thousands of dollars after having sold my shares at a loss,” he said.
“I would never have bought the shares if I knew the extent of the problems at QBE. This class action is about achieving justice for shareholders. Companies should not be able to get away with being less than open and honest with their shareholders.”
Maurice Blackburn Lawyers is the only Australian law firm to have settled shareholder class actions for more than $100 million, having done that five times to date. The firm has a proud reputation for excellence in class actions, driven by a desire to ensure that all shareholders have access to a meaningful private redress system.
“This reputation is measured not solely on our record recoveries, but also on the type of cases we take on, and the way in which we run and manage those cases for our clients,” Mr Varghese said.