Federal Court class action filed against Crown Resorts Ltd.
4 December 2017
After months of investigation and hundreds of registrations from individual and institutional shareholders, Australia’s leading class action firm, Maurice Blackburn Lawyers, will today file its Federal Court class action against Crown Resorts Limited (ASX: CWN).
The class action centres on a sharp price drop of almost 14 per cent on 17 October 2016, suffered by Crown shareholders in the aftermath of 18 Crown employees having been arrested and detained in China in relation to alleged gambling crimes.
The arrests were significant for their impact on Crown’s future revenue from VIP gaming. They also raised questions regarding Crown’s significant investment in its Sydney venture at Barangaroo, which had been spruiked as a VIP focussed casino and luxury resort.
Following the arrests, the Crown staff pleaded guilty and were convicted by the Baoshan District Court of contravening the Criminal Law of the People’s Republic of China, receiving fines and sentences of imprisonment. Crown’s VIP revenue in Australia fell by 48.9 per cent in FY17.
National Head of Class Actions at Maurice Blackburn, Andrew Watson, said Crown decided to roll the dice on its Chinese VIP operations against a backdrop of a known Chinese crackdown on illegal gambling related activities, and that gamble backfired spectacularly.
“Shareholders should have been apprised of the risks that Crown was taking in China and the threat they posed to the company’s revenue streams,” Mr Watson said.
“Chinese authorities could not have made the risks of marketing gambling any plainer to Crown or other casino operators, yet Crown ignored these warnings.
“Fortunately in Australia, companies can be held accountable via the class action mechanism, for breaching their legal obligations to make timely and accurate disclosures to the market. Those failures affect many, many people.
“Those legal obligations are what underpins the integrity of the entire market – it is how investors can make properly informed decisions about how to allocate capital where it is most deserving – that confidence in the market is pivotal to its proper functioning.
“That is why our regulators, including the ACCC and ASIC have both commended the complementary role class actions can play in providing a level of private enforcement.”
The class action has been filed on an open-class basis, meaning shareholders can still register to recover compensation for their Crown shares purchased between 6 February 2015 and 16 October 2016. Registration is online at www.mauriceblackburn.com.au/Crown