Maurice Blackburn Lawyers is preparing to launch a class action against Woolworths for alleged breaches of the Corporations Act.
Woolworths investors caught out by a 2015 price dive of 13.7% want to sue the retail and supermarket giant in a class action that could be worth more than $100 million.
The breaches of the Corporations Act alleged by Maurice Blackburn Lawyers, together with litigation funder IMF Bentham, relate to alleged miscommunication of profit guidance in FY15.
Maurice Blackburn class action Principal Andrew Watson said it was clear that Woolworths had known it was “significantly behind” on profit projections from October 2014, but still maintained guidance until publication of its half year accounts in February 2015.
Woolworths provided guidance on 29 August 2014 that its FY15 NPAT was expected to increase from 4% to 7%.
“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, both 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.”
Woolworths said in a statement on its website “Woolworths considers that it has, at all times, complied with its continuous disclosure obligations. If proceedings are commenced they will be defended on this basis.”
Maurice Blackburn corporate relationships manager Cameron Scott said that as the registration process only opened today, there is no way to know the exact numbers of people involved.
“There will be a large number of shareholders (both individual retail shareholders and large institutional investors) that will have suffered from the drop, it is too early to put a number on it,” he said.
IMF Bentham senior investment managers Wayne Attrill said it was a market-based response to a market-based issue that would only proceed if it was supported by enough shareholders.
“This is a chance for investors who believe they were deprived of information on the true state of affairs of the company standing up and being able to access a meaningful redress mechanism whilst sending a strong message to the company that such breaches aren’t acceptable,” he 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.”
An online registration was opened for shareholders to lodge their claim.