LISTED law firm Shine Corporate (ASX: SHJ) will face a class action from aggrieved shareholders after its shares plummeted 73 per cent following a 10-day suspension from trade in 2016.
The class action, filed in the Supreme Court of Queensland, alleges that Shine misled investors in a series of representations it made to the market in respect of its FY2014 and FY2015 results, in contravention of the obligations it owed under the Corporations Act 2001 and ASX Listing Rules.
On 29 January 2016, the value of Shine shares fell 73 per cent following the suspension from trade for "provisioning and business reviews". Its updated market guidance saw its forecast FY16 earnings slashed by half, from $54 million to $26 million which wiped out more than $250 million of market capitalisation.
Quinn Emanuel Urquhart & Sullivan (QE) have filed the class action and are backed by US litigation funder, Regency Funding and will represent shareholders who acquired shares in Shin between 27 August 2014 and 29 January 2016.
The class action contends that Shine knew, or ought to have known, prior to its trading halt in January 2016 that discrepancies in its work in progress recovery rates, coupled with other related "business factors", such as "sub-optimalfee earners", "legislative reforms" and "market competition" would likely have a material impact on its FY2016 results and accordingly, should have been disclosed to the market.
"Shine claims to be 'always standing up for the little guy.' But, its shareholders are the very 'everyday Australians' it claims to protect," Damian Scattini, a Partner at QE says.
"It is ironic that a law firm, which claims to specialise in class actions, would mislead its own investors."
In a statement to the ASX, Shine says it will "vigourously" defend the claim. At around 12.30pm (AEST) SHJ shares were trading down two per cent to $0.695
Business News Australia
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