It has been a while coming but embattled listed law firm, Slater and Gordon (SGH) is facing a class action from investors looking for $250 million in damages over the company’s costly expansion into the UK market in early 2015.
News of the action sent the shares down and they closed at 39 cents, off 8.3%. Since the start of last year, the shares have fallen more than 93%.
Maurice Blackburn Lawyers announced yesterday it had launched legal action filing on behalf of more than 3,000 shareholders (including individual and institutional holders), claiming “problems across the board” at S&G “that affected SGH’s disclosures to the market about the company’s finances, leading to multiple occasions that SGH didn’t disclose material information to its shareholders in a timely manner.” The company told the ASX that it had not yet been served with the claim. It declined to make further comment.
The irony is that one ambulance chasing legal firm in Slater and Gordon is being pursued by some of its shareholders, via its major Australian rival in the ambulance chasing industry.
The allegations encompass S&G’s 2015 acquisition of the professional services arm of UK-based Quindell. After the acquisition, Quindell came under investigation by the UK’s Serious Fraud Office over its historic business and accounting practices. A wrote down and other lossesof the business pushed Slater and Gordon into the red to the tune of of $A1.02bn in the year to June 30, 2016.
The firm had net debt of A$682.3m at the end of June.
“On multiple occasions over the course of less than a year, the share market was shocked at bad news coming out of the company, which led to more than $2 billion in the value of the stock plummeting,” a statement from Maurice Blackburn said.
Andrew Watson, national head of class actions at Maurice Blackburn, said yesterday:
“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.
“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.” “They didn’t just miss their earnings guidance predictions – they were miles off – and that suggests systemic issues across the company,” he 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,” according to Mr Watson.
