Slater & Gordon Face Potential Class Action By Rival Maurice Blackburn
Monday 4 January 2016 @ 11.38 a.m. | Corporate & Regulatory
Slater & Gordon, the first legal firm in the world to list on the stock exchange, may now potentially become embroiled in a shareholder class action. Rival firm Maurice Blackburn announced late last year that they were accepting registrations from individual shareholders who purchased shares between 1 April 2015 and 13 December 2015.
The Sydney Morning Herald reported that Maurice Blackburn principal Jacob Varghese told a press conference:
“On five occasions this year shareholders have been shocked by bad news about the company that has led to immediate falls in the share price… That happens once it's a tragedy, that happens twice it's a farce, that happens three, four and five times and you've got to start asking serious questions about the quality of governance and the internal accounting systems.”
The Maurice Blackburn website also elaborates on the potential breadth of the class action, saying:
“SGH [Slater & Gordon] shares have lost almost 90 per cent of their value since April 2015 as a series of questions have been raised about its acquisition in the United Kingdom of the Professional Services Division of Quindell PLC for approximately A$1.3 billion, the impact of proposed legislative changes affecting the personal injury legal market in the United Kingdom, and most recently the withdrawal of revenue and earnings guidance that had been emphatically re-affirmed only weeks previously. These issues raise significant concerns about the timing and accuracy of information released by SGH to the market.”
According to ABC News, the latest of these incidents occurred in November 2015, when “Slater & Gordon attempted to quell investor unease over its plunging share price by assuring investors, through the share market, that it was on track to fulfil its earnings projections”, but then backed away from this announcement 17 days later.”
Mr Varghese also told the Sydney Morning Herald that he was aware of “the irony of Maurice Blackburn launching a class action against Slater & Gordon which it competes with in the class action space”, and said:
“In terms of Slater & Gordon[’s] main practice[,] they are a law firm that works for plaintiffs and that is something we should all have respect for because we're all in the same boat… But Slater & Gordon runs a very different business to Maurice Blackburn[,] they're a listed company and as a listed company they have obligations to shareholders to keep them in their confidence to tell them how the business is going…”
The Sydney Morning Herald also reported that ACA Lawyers were “in the preliminary stages” of preparing a class action.
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