Australia’s number one class actions law firm, Maurice Blackburn Lawyers, is today filing what shapes as one of the largest shareholder class action in Australian history – against listed law firm Slater and Gordon (SGH).
With more than 3000 aggrieved participants – including some of the nation’s largest institutional investors and super funds looking to recover members’ money – the case looks set to surpass existing Australian benchmarks for shareholder class action damages claims.
National Head of Class Actions at Maurice Blackburn, Andrew Watson, said people and organisations that lost money had signed up to the class action in droves.
“The sheer scale of the alleged wrongdoing, its impact on the share price and the number of shareholders affected mean that this case will be one of Australia’s largest shareholder actions,” Mr Watson said.
“In addition to the hundreds of millions of dollars in losses our registered clients have suffered, we’re also protecting the interests of all other relevant shareholders by filing an open action, bringing the total claimed losses to more than a quarter of a billion dollars.”
The Maurice Blackburn case will allege that there were problems across the board within SGH that extended well beyond the ill-fated acquisition in the UK of Quindell’s Professional Services Division that affected SGH’s disclosures to the market about the company’s finances, leading to multiple occasions that SGH didn’t disclose material information to its shareholders in a timely manner.
On multiple occasions over the course of less than a year, the share market was shocked at bad news coming out of the company, which led to more than $2 billion in the value of the stock plummeting.
- 30 March 2015 – $1.3b acquisition of Professional Services Division of Quindell announced. Shares trade at around $7.50-$8.00
- 28 August 2015 –FY15 results released, includes guidance for FY16. Guidance confirmed on 30 September and again on 19 October
- 20 November 2015 – SGH AGM announcement that it will still meet guidance. Shares fall approximately 30% over two trading days (20 Nov and 23 Nov)
- 25-27 November 2015 – UK Government announce proposed regulatory changes. SGH says no impact to FY16 results. Over two days, shares fall 51% ($1.92 to $0.69)
- 30 November 2015 – SGH reaffirms FY16 guidance and that UK Government proposals will not impact upon SGH UK or SGH AUS businesses.
- 17 December 2015 – FY16 guidance withdrawn, shares fall by almost 20%.
- 29 Feb 2016 – 1H16 results released, $958.3m loss for the half including huge $814m impairment to value of acquired PSD. Shares drop almost 60% in 2 days
“They didn’t just miss their earnings guidance predictions – they were miles off – and that suggests systemic issues across the company. The problems that are currently known, and there are many of them, might be just the tip of the iceberg,” Mr Watson said.
“To blindside shareholders once is really bad news, if it happens twice it’s then a farce – but to happen again and again and again – you can understand why shareholders want serious questions answered about the internal corporate governance of the company.”
One of those shareholders is Matt Hall, who will lead the class action on behalf of the thousands of aggrieved shareholders nationwide.
“As an investor in listed Australian companies, I rely on the timely disclosures that listed companies make, and I act on primary information coming out of companies, such as the repeated positive disclosures Slater and Gordon made to investors,” Mr Hall said.
“When those disclosures aren’t accurate, or are misleading, the result can be devastating for individuals who invest as I do, and for individuals that are directly affected when their fund managers lose out because the market isn’t properly informed or properly priced.”
“For investors such as myself, the integrity of the market is vital, and one reason I’m leading this class action is because I think the class actions regime plays an important role in the enforcement mix that ensures a necessary check and balance on corporate conduct.
“It’s important for all shareholders large and small to be able to have appropriate access to justice and to hold companies to account and I believe that by putting my hand up to take on the role of leading this class action, that can be achieved.”