SLATER AND GORDON WILL VIGOROUSLY DEFEND $250 MILLION CLASS ACTION

Written on the 13 October 2016 by James Perkins

SLATER AND GORDON WILL VIGOROUSLY DEFEND $250 MILLION CLASS ACTION

AFTER so often announcing its own class actions, Slater and Gordon (ASX: SGH) is now the subject of one of the biggest actions in Australia's corporate history, launched by Maurice Blackburn Lawyers on behalf of around 3,000 shareholders.

The claim will allege that Slater and Gordon failed to disclose vital information relating to the acquisition of the professional services business of Quindell in the UK, and the impact of legislation changes in the UK, in a timely manner.

However, Maurice Blackburn says the problems "extended well beyond" those issues.

"The sheer scale of 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," says national head of class actions at Maurice Blackburn, Andrew Watson.

"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."

The claim is reportedly worth more than $250 million, which would eclipse the $57.5 million settlement that Sigma Pharmaceuticals made with its shareholders in 2010 - currently the largest class action payout to ASX shareholders in Australia.

The action has been filed in the Federal Court and Slater and Gordon released a statement to the ASX today saying it will vigorously defend the action and has hired Arnold Bloch Leibler to assist the company in that defence.

"The class action will not affect the day to day conduct of Slater and Gordon's client matters. Our clients can rest assured that Slater and Gordon and its lawyers will continue to work hard to offer them access to affordable, world class legal services," says Andrew Grech, Slater and Gordon's group managing director.

"Our management team will remain focused on executing our performance improvement program across the business to improve profitability and cash flow and reduce debt, in line with previous announcements made by Slater and Gordon."

Slater and Gordon bought the professional services division of Quindell in March 2015 for $1.3 billion. At the time of releasing its annual report in August 2015, the company released a guidance that it reaffirmed in September, October and November,
However, in the two days following the November announcement, the share price fell 30 per cent.

Two days later, the UK Government announced proposed regulatory changes, which Slater and Gordon said would not affect FY16 results and the firm's shares fell another 51 per cent over two days.

The company again reaffirmed its FY16 guidance on 30 November, but on 17 December withdrew that guidance.

Financial results from the first half of 2016, released in February, contained a $958.3 million loss, including a $814 million write-down on the value of the Quindell business. Shares plummeted another 60 per cent in two days.

Slater and Gordon shares reached a peak of $8.07 in April 2015, but today the company trades at $0.385.

"They didn't just miss their earnings guidance predictions - they were miles off - and that suggests systemic issues across the company," Watson says.

"The problems that are currently known, and there are many of them, might be just the tip of the iceberg.

"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."

 


Author: James Perkins Connect via: Twitter LinkedIn

Latest News

BRISBANE COAL TERMINAL REOPENS AFTER SHIPLOADER REPAIR

COAL loading has recommenced at New Hope's (ASX: NHC) Brisbane terminal today after repairs to its ship loader, w...

SUPERYACHTS OFFER UNTAPPED POTENTIAL AT COMMONWEALTH GAMES

SUPERYACHT Australia has devised a strategy to attract more superyachts to Queensland and capitalise on revenue op...

GDP FIGURES A 'WAKEUP CALL' FOR PARLIAMENT

THE GDP figures are an end-of-year wakeup call for Parliament about what lies ahead for the country, according to ...

ACCC GIVES GO-AHEAD FOR NEWS CORP TO BUY ARM

NEWS Corporation (ASX: NWS) has been given the green light to acquire Australian Regional Media (ARM) from APN New...

Related News

HOW MCDONALD'S AUSTRALIA REDISCOVERED ITS INNOVATIVE SPIRIT

MCDONALD'S is such a ubiquitous part of the Australian landscape today that it is easy to forget how it change...

JB HI-FI IS THE GOOD GUY IN $870 MILLION ACQUISITION

ELECTRONICS giant JB Hi-Fi has formally completed its $870 million acquisition of home appliance chain The Good Gu...

ACCC ACTS AGAINST MERITON'S RIGGED REVIEWS

MERITON Property Services is under fire from Australia's main consumer watchdog, after it allegedly engaged in mi...

ACCC FIRES WARNING SHOT TO IVF PROVIDERS

IVF clinics have been put on notice by consumer watchdog, the Australian Competition and Consumer Commission (ACCC...

Contact us

Email News Update Sign Up Contact Details

Subscribe to our mailing list

* indicates required
Email Format

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter