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Slater and Gordon (ASX:SGH) will prepare a class action for those who acquired shares in Melbourne-based Hastie Group in the months before it was placed into voluntary administration.
Providing there is sufficient investor interest, the planned class action will be funded by listed litigation funder IMF Bentham Limited (ASX: IMF) and will be against Deloitte Touche Tohmatsu and Deloitte Corporate Finance.
Slater and Gordon principal lawyer Tim Finney says the action will allege that the Deloitte entities engaged in misleading conduct, in contravention of the Corporations Act 2001 (Cth), by providing assurances about the reliability and accuracy of financial statements and earnings forecasts available to investors in a June 2011 Hastie prospectus.
"The proposed class action will allege that the Deloitte entities made misstatements in the prospectus document and that, as a result, investors who purchased Hastie shares may have suffered a compensable loss," says Finney.
Hundreds of aggrieved shareholders (including mum and dad and institutional investors) have contacted Slater and Gordon following Hastie's collapse in May 2012.
"Based on our investigations, it is our opinion that there are reasonable grounds to allege that the Deloitte entities engaged in misleading conduct and, as a result, investors who bought Hastie shares, following the release of the prospectus, may be entitled to recover any losses suffered."
On 17 June 2011, Hastie Group Limited lodged a prospectus with the ASX for a $160 million capital-raising by way of institutional placements and a renounceable entitlement offer. In the following months, the company announced a series of asset impairments, substantially downgraded its full year earnings guidance and announced an anticipated earnings loss of $146 million for the first half of the FY12.
In May 2012, Hastie declared that it had discovered 'accounting irregularities' in its services business, resulting in the resignation of two non-executive directors and the company being placed into voluntary administration shortly thereafter. PPB were appointed as administrators.
The administrator appointed following the collapse, PPB Advisory, made a scathing assessment of the Hastie Group management and its aggressive acquisition drive. The report suggested Deloitte had some questions to answer after it gave its approval to a number of decisions made by the management.
At the time, Deloitte said it had abided by the relevant Australian auditing standards in its work with Hastie Group.
The collapse left around 2,700 people out of a job and many unsecured creditors millions of dollars out of pocket.
All current and former shareholders who acquired shares in Hastie, on or after 14 June 2011, are invited to register their interest in the proposed class action.
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