Two firms have announced they will be pressing ahead with class action suits against Slater and Gordon, one of which is shaping up to be among the largest shareholder class action suits in Australian history.
Maurice Blackburn Lawyers has announced it will file a $250 million class action against the embattled law firm.
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Andrew Watson, national head of class actions at Maurice Blackburn, said more than 3,000 aggrieved people and organisations that lost money have signed up to the class action.
“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.”
Mr Watson said the Maurice Blackburn case will allege that there were problems across the board within Slater and Gordon, extending well beyond the ill-fated acquisition in the UK of Quindell’s professional services division, which affected Slater and Gordon’s disclosures to the market about the company’s finances, leading to multiple occasions that Slater and Gordon didn’t disclose material information to its shareholders in a timely manner.
Mr Watson noted that on multiple occasions over the course of less than a year, the share market was shocked at the bad news coming out of the firm, which led to the value of its stock plummeting by more than $2 billion.
“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.”
ACA Lawyers has also announced it is finalising its investigation into a proposed shareholder class action against Slater and Gordon, and intends to commence proceedings.
Funding for the investigation is being provided by JustKapital Litigation Partners, a listed Australian funder, and London-based Woodsford Litigation Funding.
ACA Lawyers’ investigation has identified potential misconduct by Slater and Gordon prior to its April 2015 capital raising, going as far back as the release of its 2014 full-year results.
Bruce Clarke, principal of ACA Lawyers, said in light of the developments since April 2015, the firm has been investigating Slater and Gordon’s conduct over several previous years.
“It is important we ensure we identify all losses suffered by shareholders that may be the result of Slater and Gordon’s misconduct,” Mr Clarke said.
“We are taking the time to ensure we make the strongest case possible to recover the maximum possible losses on behalf of Slater and Gordon shareholders.
“We are acting for all affected shareholders, being anyone who purchased shares after the release of the 2014 full-year results on 12 August 2014 and prior to the release of the 2016 half-year results.”
The claim period for any class action brought against Slater and Gordon by ACA Lawyers may run from 12 August 2014 to 28 February 2016.
Slater and Gordon provided a market update on the morning on 12 October 2016, responding to media reports of a class action against the firm.
“Slater and Gordon Limited (ASX: SGH) notes media reports that Maurice Blackburn intends to file a class action today on behalf of shareholders of Slater and Gordon,” the update said.
“Slater and Gordon has not yet been served with a class action claim. Slater and Gordon will inform the market if a class action claim is served on the company.”
The firm has provided no further updates yet.