Compensation sought in class action against Slater and Gordon

Slater and Gordon shares sank 6pc after the filing of a $250m class action seeking to recoup investor losses.

Slater and Gordon managing director Andrew Grech. Pic: Britta Campion

Maurice Blackburn today filed a class action against stressed law firm Slater and Gordon in a bid to recoup losses for shareholders from a share price collapse tied to a calamitous UK expansion.

Confirmation of the $250 million-plus class action, among the largest ever shareholder class actions in Australia, forced beaten-down Slater and Gordon shares 6 per cent lower in morning trade.

It also came as ACA Lawyers said it was finalising its own class action against Slater and Gordon, hinting an intention to press forward shortly.

The previously-flagged class action from Maurice Blackburn relates to any investor who purchased Slater and Gordon (SGH) shares between March 30, 2015 and February 24, 2016, a period in which around $2 billion was stripped from the law firm’s valuation.

At the heart of the complaint is queries on the due diligence behind the disastrous $1.3 billion purchase of the professional services operation of UK-based Quindell, which was primarily funded through a $900 million capital raising, as well as activities leading up to a sharp downgrade in profit guidance.

“The statement of claim alleges that … SGH made false and misleading statements, engaged in misleading and deceptive conduct, and/or breached its continuous disclosure obligations to shareholders which prevented shareholders from being able to make informed investment decisions based on complete, accurate, and timely information about the Quindell acquisition and the true state of the company’s overall financial position,” Maurice Blackburn said in a statement.

“It is alleged that SGH contravened various provisions of the Corporations Act, ASX Listing Rules, the Australian Securities and Investment Commissions Act and the Australian Consumer Law, and that these contraventions caused the price of SGH shares throughout the period to be higher than would have been the case had the true state of affairs been known.”

Maurice Blackburn said it would also make the argument that if the true risks of the Quindell purchase were known, the capital raising and acquisition would not have proceeded.

The firm added compensation sought for affected shareholders would be of a “very significant magnitude”.

“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,” Maurice Blackburn national head of class actions, Andrew Watson, said.

“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.”

A separate class action is likely to be pursued by ACA Lawyers, with the firm saying it was shoring up a case that would seek to recompense affected investors through a longer period than the class action pursued by Maurice Blackburn.

ACA detailed the prospect of a class action on December 18 and today announced its investigation had discovered “potential misconduct” as far back as Slater and Gordon’s FY2014 results.

“It is important we ensure we identify all losses suffered by shareholders that may be the result of Slater and Gordon’s misconduct,” ACA principal Bruce Clarke said.

“We are taking the time to ensure we make the strongest case possible to recover the maximum possible losses on behalf of Slater and Gordon shareholders.”

Shareholders who bought shares from August 12, 2014 through until February 28, 2016 will likely be eligible to participate in the claim.

In a statement this morning, Slater and Gordon said it was yet to formally be served with papers relating to the Maurice Blackburn-led proceedings.

“Slater and Gordon will inform the market if a class action claim is served on the company.”

The group’s shares skidded 6 per cent to 39.5c by 11.40am (AEDT).