Vocation Class Action: Investors and Share Price Collapse
Friday 14 November 2014 @ 1.17 p.m. | Corporate & Regulatory | Legal Research | Trade & Commerce
Law firm Maurice Blackburn, a veteran of class actions in Australia, has called for investors in private education provider Vocation to express an interest in a potential class action over the company’s share price collapse, after being approached by more than 30 institutional investors wanting to proceed.
Background to the Class Action
On 28 October 2014, Vocation Limited (VET) shocked the market when the company publicly announced a settlement with the Victorian Department of Education and Early Childhood Development (DEECD). The settlement included the forfeiture of almost $20 million of expected payments to VET. The concerns raised by the DEECD and Victorian regulators shook the market’s confidence in VET causing its share price to drop close to 60% ($1.29) on 28 October 2014 and a loss of $350 million in market capitalisation over the following 10 days.
Basis for Class Action
Maurice Blackburn is investigating a shareholder class action in relation to VET’s alleged breaches of its continuous disclosure obligations under the ASX Listing Rules (Rule 3.1) and the Corporations Act 2001 (Cth).
The investigation is also considering whether VET misled the market. Maurice Blackburn is investigating the company’s actual and constructive knowledge of the extent of the regulatory concerns dating back to the IPO and listing on 6 December 2013.
If VET was, or ought to have been, aware of the regulatory reviews and concerns in relation to its subsidiaries at the time of its listing, and it failed to adequately disclose those matters, then investors who either subscribed to the IPO, subsequently purchased in on-market trades or via the institutional placement in September 2014, may have been paying an inflated price. The proposed class action would seek to recover the inflation paid by investors.
Jacob Varghese, who would lead any potential class action, said it was clear there was a level of concern in the investor community about how the company had “got it so wrong” on what information should have been disclosed to shareholders about a review into the company’s Victorian operations:
“It’s clear now that Vocation was under the microscope of regulators, and your newspaper in particular has uncovered that regulators were looking at entities that went into the float, so if it’s true that information was withheld, then it’s a very serious concern for the integrity of the market and every shareholder would have the right to feel aggrieved by that.”
The Australian Securities & Investments Commission is already investigating the non-disclosure of materiality.
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