SLATER & GORDON FACES CLASS ACTION ON TWO FRONTS

Written on the 23 December 2015 by Nick Nichols

SLATER & GORDON FACES CLASS ACTION ON TWO FRONTS IT'S a case of law firm versus law firm as Maurice Blackburn calls for disgruntled Slater & Gordon (ASX:SGH) shareholders to band together for a possible class action against the embattled law firm.

The move is one of two potential fronts Slater & Gordon may be facing along with another potential move against the listed entity by class action specialist ACA Lawyers.

And while Slater & Gordon this week had to issue a please explain to the ASX regarding its financial accounts, the Melbourne-based group issued a statement today saying it has not been notified of any legal proceedings against it.

It is unfamiliar territory for Slater & Gordon, the company that for decades has specialised in class actions from the other side of the fence.

"Slater and Gordon will continue to monitor the situation and update the market if necessary," the company says in a statement to the ASX.

At issue is a decimation of shareholder value over the past year, with Slater & Gordon shares falling about 90 per cent over the period as problems with its newly acquired UK operations take their toll.

Slater & Gordon last week announced that its UK business, the Quindell arm acquired in March for $1.3 billion, will put a drag on earnings in the current half year as a result of poorer than expected results from court cases on its books.

The ASX yesterday quizzed the company on its updated profit outlook which will not meet forecasts made as recently as November.

ACA Lawyers is focusing its class action on Slater & Gordon's forecast that the Quindell acquisition was expected to increase group earnings per share by 30 per cent.

It says Slater & Gordon reiterated its earlier 2016 profit guidance at the AGM in November despite expecting negative cashflow of between $30 million and $40 million, before last week withdrawing its profit guidance altogether.

Maurice Blackburn has issued a statement calling for shareholders to pursue a possible class action against the company following 'long and serious consideration of the series of events that have plagued SGH this year', particularly from April 1 to December 16.

"Shareholders in Slater & Gordon have a right to be profoundly disappointed in last week's announcement and subsequent further price drop, after having already suffered the company having lost most of its value since April this year," says Jacob Varghese, Maurice Blackburn's class actions principal.

"To be walking away from the earnings guidance it reaffirmed only a few weeks ago makes it increasingly hard to believe that the company has proper systems in place or that the guidance should have been given in the first place.

"We now know SGH has made admissions to the Australian Securities Exchange that the company had prior knowledge of last week's announcement, and it appears highly likely that among the throng of management issues it has grappled with this year are further breaches.

"As Australia's number one class actions law firm, we know that poor business decisions or a price drop of themselves don't satisfy the requirements of launching a class action, but we are now firmly of the view that the activities of SGH require proper scrutiny by the best.

"So today we have opened an online web portal for shareholders to register their interest and their relevant holdings, because we will need those details in the likely event that we proceed with a shareholder class action."

Slater & Gordon shares slumped 7 per cent today to 91c following the news. The shares hit a high of $8.07 in April after launching a $6.37-a-share entitlement offer that raised about $890 million.

Author: Nick Nichols

Latest News

ASF UNVEILS TRAFFIC PLANS FOR THE SPIT

A SECOND bridge over the Nerang River is the centrepiece of the ASF Consortium's plan to improve traffic flow ...

BHP AND VALE EDGE CLOSER TO $47.5 BILLION SAMARCO DAM DISASTER SETTLEMENT

BHP Billiton (ASX: BHP) and Brazilian mining company Vale have entered into a preliminary agreement with Brazilian fe...

BLK SPORT FOUNDER TYRON BRANT REMAINS CEO UNDER NEW OWNERS

BLK Sport has been purchased from receivers McGrathNicol by a private consortium composed of a TimorLeste-based oi...

CARSALES CEO RETIRES AS NEW COMPETITOR COX FINALISES MERGER

CARSALES will have a new CEO as it takes on a fresh challenger to its crown as the dominant online car sales portal i...

Related News

CARSALES CEO RETIRES AS NEW COMPETITOR COX FINALISES MERGER

CARSALES will have a new CEO as it takes on a fresh challenger to its crown as the dominant online car sales portal i...

BUSINESS CONFIDENCE AT A SIX-YEAR HIGH

SMALL and medium businesses have entered 2017 with their confidence at a six-year high, building on strong gains m...

CONSUMERS PESSIMISTIC ENTERING 2017

CONSUMER confidence remains at its weakest point since April 2016, according to the latest Westpac Melbourne Institut...

RISE OF STARTUP SUPPORT PROGRAMS NOT AS ROSY AT IT SEEMS

ENTREPRENEURIAL cultivation companies in Australia are appearing quickly, but questions have been raised about whe...

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter