Slater & Gordon tight-lipped as Australian law firms recruit shareholders for group actions


Slater & Gordon

Slater & Gordon: will update market if necessary

Slater & Gordon (S&G) has remained tight-lipped as two Australian law firms invite shareholders in S&G to register for potential group actions against it.

One of the firms, Maurice Blackburn, said concerns centred on the “timing and accuracy” of information released by S&G to the market and to potential shareholders, who had since suffered from a “devastating” price drop.

In the briefest of statements to the Australian Stock Exchange yesterday, S&G said it had “not been notified of any legal proceedings” but it would “continue to monitor the situation and update the market if necessary”.

The firm said it noted “recent media statements from two law firms announcing investigations into the viability of a shareholder class action” against it.

S&G last week withdrew its predictions for the current financial year, saying profit was likely to be hit as a result of “slower than expected” case settlements in the UK.

Maurice Blackburn Lawyers describes itself as “Australia’s leading social justice law firm” and has 25 offices across Australia.

In a statement the firm said that “over the past several months”, it had “carefully monitored the events surrounding the precipitous decline in the price of shares” in S&G Holdings (SGH).

“SGH 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 $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.

“In light of these concerns, Maurice Blackburn is accepting shareholder registrations via a simple website form with a view to instituting a shareholder class action, should we determine after further investigation that SGH has a case to answer in relation to its disclosures to the market and the devastating share price drop suffered by its shareholders.”

Meanwhile ACA Lawyers, a commercial law firm based in Sydney, said it was investigating a possible class action against S&G for “potentially misleading the market” over both the $890 million capital raised to acquire Quindell’s Professional Services Division in the UK and profit forecasting for the 2016 financial year.

The firm said, in a statement: “At the time of the capital raising in April the company told shareholders that the Quindell acquisition would improve earnings per share by more than 30% in the first year.”

“Despite reassuring shareholders at their November AGM and in market announcements as recently as 30 November that the company remained on target to meet the 2016 earnings guidance,” ACA said S&G “suddenly withdrew that guidance and now says the forecast may not be met”.

The law firm said that since the capital raising in April, S&G’s share price had fallen 86%, wiping almost $2bn off shareholder value.

Bruce Clarke, principal of ACA Lawyers, said given S&G’s “repeated assurances to its shareholders concerning the Quindell acquisition” and last week’s “sudden about turn”, shareholders could have little confidence in the company’s projections.

Tags:




Leave a Comment

By clicking Submit you consent to Legal Futures storing your personal data and confirm you have read our Privacy Policy and section 5 of our Terms & Conditions which deals with user-generated content. All comments will be moderated before posting.

Required fields are marked *
Email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Blog


Unbundled legal services: opportunities, risks and disclaimers

Unbundled legal services, often referred to as ‘limited scope’ or ‘discrete task’ representation’, have gained traction in recent years as a response to the rising demand for affordable legal assistance.


Taking a compliance-driven approach to enhance PII renewal

Adopting a compliance-driven approach can significantly streamline and improve the professional indemnity insurance renewal process, as firms now begin to look forward to 2025.


Compliance in the age of technology

Does keeping up with best practice for your law firm in compliance, finance and risk management keep you awake at night? If so, you are not alone.


Loading animation