Star Entertainment Investors Launch Class Action Lawsuit
They say it never rains but it pours when things are not going as they planned. That is an understatement of epic proportions if you have ties to under-fire Australian casino operator Star Entertainment. Not only is the company under government investigation, but its own investors have turned against it. Investors launched a class action lawsuit on Wednesday.
The class action lawsuit comes amid a damning inquiry into the group’s casino operation in Sydney. Investors want compensation for misleading or deceptive representations Star made. They argue Star’s underhand tactics caused significant losses on the stock market. For example, Star’s share price fell more than 30% following media reports into Star’s misconduct in 2021. This wiped more than $1 billion from the company’s value.
Slater & Gordon is the firm that brought the class action lawsuit to the Supreme Court of Victoria. Ben Zocco, one of Slater and Gordon’s senior associates, explained why the class action lawsuit is happening.
“When investors purchase shares in a listed company, they are entitled to assume that all of the material information relevant to its financial position had been disclosed to the market. Star insisted that it took compliance seriously and ran its business ethically, honestly, and with integrity. Our investigations, to date, in addition to the extraordinary evidence released so far in the inquiry, suggests that they did everything but.”
Star Entertainment Will Defend Class Action Lawsuit
Laws bind ASX-listed companies to release statements if any activity could cause a change in share price. Star released a brief, two-paragraph statement where it confirmed the legal action in addition to plans to defend itself against the class action lawsuit.
“The Star Entertainment Group has been served by Slater & Gordon with a statement of claim for a securities class action lawsuit in the Supreme Court of Victoria.”
“The claim alleges The Star failed to comply with continuous disclosure requirements and engaged in misleading or deceptive conduct between March 29, 2016 and March 16, 2022 through various alleged disclosures or non-disclosures about its systems, controls, operations, and regulatory risks. The allegations reference the ongoing ILGA inquiry and previous media reporting.”
Star’s Board of Directors signed off the statement with, “The Star intends to defend the proceedings.”
It is challenging to see what defence Star will use when there is so much evidence stacked against it. The company faces the very real prospect of losing its operating licence in Sydney and, perhaps, at its other casinos.
Furthermore, former Managing Director and CEO, Matt Bekier, resigned from his post this week. Bekier fell on his sword after admitting failing in his executive roles.
Slater & Gordon has not disclosed the amount of damages sought.
Star Rivals Face Own Lawsuit
It is not only Star Entertainment facing a class action lawsuit because rivals Crown Resorts are in hot water, too.
The Australian Transaction Reports and Analyses Centre (AUSTRAC) is suing Crown Resorts for potentially $1.2 billion. AUSTRAC is severely unhappy with the Crown Resorts royal commission’s findings and has launched legal action.
AUSTRAC identified poor governance, risk management, in addition to significant anti-money laundering failings it states put the Australian economy at risk. The regulator filed 547 contraventions of its rules and regulations. Each carries a maximum fine of $22.2 million, equating to a potential $1.2 billion class action lawsuit.
Crown is in the middle of a takeover from American investment giant Blackstone Group. The American company agreed to an $8.9 billion price for 100% of the Crown stock it does not already own. Blackstone has an almost 10% stake in Crown after purchasing the shares from Melco Resorts. Indeed, it was Crown’s James Packer selling those shares to Melco that kick-started the royal commission into the casino’s affairs.
Crown revealed on Tuesday the Foreign Investment Review Board (FIRB) and Commonwealth Government have no objection to the $8.9 million takeover.
