After rolling the dice and losing on its Chinese VIP gamble – a move that has resulted in several employees being detained in China – Crown Resorts Limited (CWN) is now facing a potential shareholder revolt with investors set to seek greater accountability from Crown.
“It’s not often you get to beat the house, but a successful class action can do that for shareholders wanting accountability and better standards of corporate conduct from Crown,” said Julian Schimmel, Class Action Principal at Maurice Blackburn Lawyers.
The proposed action centres on sharp price drop of almost 14 per cent in a single day suffered by Crown shareholders in the aftermath of several Crown employees being arrested and detained in China in relation to alleged gambling crimes.
Mr Schimmel said the arrests were significant for their impact on Crown’s future revenue from VIP gaming, particularly with an expected decline in VIP patronage at Crown’s casinos.
“The arrests in China occurred against the backdrop of Crown’s massive investment in its Sydney venture at Barangaroo, which has been spruiked as opening as a ‘VIP only’ casino and luxury resort in 2021,” Mr Schimmel said.
“Despite repeatedly making statements over a period of several years as to the significance of the Chinese VIP gaming market to the company’s strategy and earnings, Crown then tried to downplay the significance of the staff arrests claiming that the Chinese VIP market only comprises a small proportion of the company’s revenue.
“There is a compelling set of events suggesting that shareholders should have been apprised of the risks the Chinese environment posed to the company’s revenue streams, and therefore should have been factored in to the share price, but it wasn’t.”
Shareholders that want to recover compensation as a result of unfairly paying an inflated price for their Crown shares between 17 June 2015 and 14 October 2016 can now register their details online at www.mauriceblackburn.com.au/crown cost and risk free.