Slater & Gordon, Maurice Blackburn, consider shareholder class actions over Star Entertainment Group money laundering allegations
Slater & Gordon and Maurice Blackburn are investigating launching shareholder class actions against the casino group after media allegations saw its share price plunge.
The Star Entertainment Group is staring down the barrel of two proposed shareholder class actions after its share price dropped more than 20 per cent last week following media allegations of inaction over money-laundering risks at its Australian casinos.
On Monday class-action law firms Slater & Gordon and Maurice Blackburn confirmed they were investigating whether shareholders in the $3.5bn casino group suffered a loss due to The Star’s failure to inform them of material risks facing the business.
Central to the media allegations, published earlier this month, was the claim that The Star courted high-risk, highrolling gamblers with potential links to organised crime while sitting on independent reports from KPMG that outlined flaws in the group’s anti-money laundering and counter-terrorism financing (AML/CTF) controls in 2018.
The Star branded many of the allegations in the reports “misleading” and specifically rebutted the claim it did not act on the KPMG reports, telling the ASX last week it acted on their recommendations.
Slater & Gordon class actions practice group leader Emma Pelka-Caven said she was investigating whether shareholders had suffered a loss as a result of “materially incorrect information” when the allegations caused The Star’s share price to collapse 25 per cent at the start of last week, wiping nearly $1bn from its market value.
“We consider that the information released may give rise to a claim on behalf of shareholders against the company,” Ms Pelka-Caven said.
“At the time they purchase shares in a listed company, investors are entitled to assume that all of the material information relevant to its financial position has been disclosed.”
Maurice Blackburn principal Vavaa Mawuli said its class action would allege The Star breached continuous-disclosure obligations, engaged in misleading and deceptive conduct “and conducted its affairs contrary to the interests of members as a whole in the period’’.
“Shareholders rightfully expect casino operators to rigorously comply with anti-money laundering and counter-terrorism financing laws because casinos are unmistakably targets for criminal activity,” Ms Mawuli said.
“Shareholders had a right to expect open and transparent information from Star.”
Ms Mawuli added that the failure of The Star to disclose KPMG’s concerns in 2018 raised concerns about the company’s leadership.
“The fact that these concerns were raised in 2018 and not disclosed to the market raises real concerns about Star’s governance and shareholders should be rightfully concerned,” she said.
“Anti-money laundering laws are designed to promote public confidence in the Australian financial system. Investors are entitled to expect gaming companies to engage in best practice.
“That doesn’t appear to have occurred at Star.”
Maurice Blackburn is currently running two shareholder class actions against The Star’s main competitor, the James Packer-backed Crown Resorts, in the Federal and Victorian Supreme Courts.
The media allegations against The Star have also raised fears its NSW and Queensland casino licences could be in danger, with both state governments committing to probe the sensational claims over the coming months.
But shareholder concerns have been partly offset by The Star’s offer to share the proof it implemented KPMG’s recommendations with state regulators and with financial crimes regulator AUSTRAC, who is running a separate investigation into the company that was announced earlier this year
By Monday afternoon The Star’s shares were trading at $3.71, up 0.54 per cent on opening and 16.6 per cent above its recent low last Tuesday.
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