Investors hit by a Woolworths share-price dive of 13.7 per cent, on the back of a 2015 shock profit downgrade, are preparing to launch a shareholder class action against the retailer.
Maurice Blackburn Lawyers, with the support of global litigation funder IMF Bentham, have opened an online registration portal for aggrieved shareholders to sign up to a claim that could well exceed $100 million.
Maurice Blackburn Class Action Principal Andrew Watson says that while investigations into the case were continuing, it was clear Woolworths had known it was significantly behind on its profit projections as early as October 2014, but continued to maintain its profit guidance until publication of its half-year accounts in February 2015. When the profit guidance was revised down, Woolworths shares tumbled, losing $4.66 or 13.7 per cent of their value in two days.
“When corporations don’t abide by the laws requiring they make timely and accurate market disclosures, these aren’t mere technical breaches – it causes loss to shareholders, undermines the integrity of the market and distorts the efficient allocation of capital that could go to more deserving companies,” Mr Watson said.
“The end result is that shareholders – individual everyday Australians and large institutional investors entrusted with members’ savings such as large superannuation funds – unwittingly suffer the consequences and lose out in a major way.”
IMF Bentham Senior Investment Manager Wayne Attrill says that, like all shareholder class actions that attract litigation funding, it is a market-based response to a market-based issue, and will only proceed if enough shareholders seek redress.
“This is a chance for investors who believe they were deprived of information on the true state of affairs of the company to stand up and be able to access a meaningful redress mechanism, while sending a strong message to the company that such breaches aren’t acceptable,” Mr Attrill said.
“A strong culture of good corporate conduct is as important as ever when it comes to attracting future investment in our economy, and strong enforcement mechanisms through the public regulator and private redress via class actions help reinforce that message.”
In a statement released this week Woolworths said it had not yet been served with proceedings and considers that it has, at all times, complied with its continuous disclosure obligations.
“If proceedings are commenced they will be defended on this basis.”