Australia's largest childcare centre operator G8 Education (ASX: GEM) has been hit with a class action lawsuit by Slater and Gordon (ASX: SGH) on behalf of shareholders today.
The firm alleges G8 contravened its continuous disclosure obligations, leading shareholders who acquired G8 shares between 23 May 2017 and 23 February to suffer losses.
Slater and Gordon practice group leader Andrew Paull said investigations indicated that at the time G8 made its May 2017 forecast it knew it faced an increase in costs as a result of regulatory changes affecting staffing levels.
As such, the firm alleges G8 knew it was unlikely to increase its occupancy rate to the level required to meet the May 2017 forecast and did not alert shareholders to that fact.
"We are alleging G8 contravened its continuous disclosure obligations by failing to disclose to the market information relevant to its Full Year 2017 financial performance," Paull said.
"We also allege G8 engaged in misleading or deceptive conduct."
The class action has been commenced on a no win-no fee basis and group members will not be exposed to any out of pocket costs as a result of their participation in the claim.
G8 Education says it has not yet received any correspondence nor service of the proceedings from Slater and Gordon.
"Any such proceedings, if served, will be vigorously defended," says G8 Education.
The shareholder class action comes after G8's former chair Jenny Hutson was told she would face 29 charges at the Queensland District Court in Brisbane.
Among the charges, the Australian Securities and Investment Commission (ASIC) alleges Hutson used $928,500 of G8 Education funds to acquire shares in ANZ Bank for Crossborder Investments Pty Ltd, in which she is a director.
Hutson is also accused of allegedly giving false information and attempting to mislead ASIC as part of its investigation, while there are also charges relating to her involvement in West Bridge's acquisition of Affinity shares.
Shares in GEM are down 3.63 per cent to $1.20 per share at 10.56am AEDT.
Business News Australia
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support