The Star hit with two more shareholder class actions

Law firms Phi Finney McDonald and Shine Lawyers (ASX: SHJ) have served embattled casino operator The Star (ASX: SGR) with two more shareholder class actions over allegedly misleading representations about anti-money laundering and counter-terrorism financing (AML/CTF) obligations.

It follows two ‘substantially similar’ class actions launched against The Star by Slater & Gordon in March 2022 and by Maurice Blackburn in November.

The news also comes as South Australia's SkyCity review has been put on pause as regulators wait for AUSTRAC proceedings to wrap up.

As with the Slater & Gordon and the Maurice Blackburn class actions, The Star said it would defend both law suits, which were filed in the Supreme Court of Victoria. 

Covering a six-year time period from 2016 to 2022, the Phi Finney McDonald claim alleges The Star made misleading representations about its systems and processes with AML/CTF obligations, and failed to disclose relevant information it had about those matters to the market - contrary to the interests of shareholders.

Phi Finney McDonald alleged The Star's share price was inflated due to breaches of continuous disclosure obligations and misleading and deceptive conduct.

"We have conducted detailed due diligence into the proceeding, including the Bell Review in NSW, the Gotterson Review in Queensland, the AUSTRAC proceeding against Star and the ASIC proceeding against current and former directors of Star," Phi Finney McDonald director Tim Finney said.

Shine's action deals with materially similar allegations, with the firm claiming The Star failed to make disclosures to the market about AML/CTF breaches and its links to organised crime, fraud and corruption over a period between March 2016 and May 2022.

The firm said once revelations of alleged misconduct came to light the company's share price plummeted, resulting in the company losing more than $1 billion in value.

Shine joint head of class actions Craig Allsopp said investors were the "biggest losers of Star's gamble with the truth".

“We allege Star knew, or ought to have known, that this wide ranging misconduct occurred and that it would have a hugely detrimental impact for its shareholders once exposed," Allsopp said.

"Star represented to investors that it was a safe bet, when it was anything but, and we’ll be looking to hold Star to account for their losses."

Since the second class action was launched by Maruice Blackburn in November, The Star has continued to be embroiled in various legal matters arising from reviews conducted by both the New South Wales and Queensland gaming regulatory bodies.

This includes a civil enforcement action from AUSTRAC commenced in late-November alleging ‘serious and systemic’ failures that exposed The Star to criminal exploitation.

It was also hit with a $100 million fine and a 90-day suspension of its casino licence in Queensland after the state’s Attorney-General took a hard line position against the casino group in the wake of the Gotterson review of its Brisbane and Gold Coast operations.

The Australian Securities and Investment Commission also took a swipe at The Star’s top brass, who were sued by the watchdog in December 2022 for alleged breaches of their directors duties.

Those in the line of fire include former chair John O’Neill, former managing director and CEO Matt Bekier, the company’s current chair Ben Heap, current non-executive director Katie Lahey, former non-executive directors Richard Sheppard, Gerard Bradley, Sally Pitkin, Zlatko Todorcevski, former company secretary and group general counsel Paula Martin, former chief casino officer Greg Hawkins and former CFO Harry Theodore.

The legal drama for The Star stems from the New South Wales review into The Star’s suitability to hold a casino licence, which led to a $100 million fine and mass-resignations from The Star board, including former CEO Matt Bekier and former executive chairman John O’Neill who both stepped down just prior to appearing at the Independent Liquor and Gaming Authority review.

South Australia's SkyCity review put on pause

In other casino regulatory news, a review of SkyCity Entertainment Group’s (ASX: SKC) suitability to hold a casino licence in Adelaide has been put on hold pending the resolution of AUSTRAC civil penalty proceedings against the company.

Announced in December last year, AUSTRAC took SkyCity to the Federal Court for alleged non-compliance with anti-money laundering and counter-terrorism financing laws.

According to AUSTRAC deputy CEO Peter Soros, the investigations into SkyCity had uncovered ‘systemic failures’ on the casino’s behalf in its approach to AML/CTF obligations.

Because of these proceedings, South Australia’s gaming regulator - Consumer and Business Services - has put its review of SkyCity Adelaide on hold pending the resolution of AUSTRAC’s law suit.

The Honourable Brian Martin was due to report back to the South Australian Liquor and Gambling Commissioner by 1 February.

“The Commissioner has advised that Mr Martin is of the view that until the resolution of the proceedings it is not possible to determine reliably the question of suitability,” SkyCity said.

“On that basis, the Commissioner has determined to put the independent review on hold and has extended the time for the provision of a written report of the findings of the independent review until after the conclusion of the proceedings.

“SkyCity Adelaide continues a constructive dialogue with the Commissioner.”

Liquor and Gambling Commissioner Dini Soulio said he had received preliminary materials from Martin, but noted that there was ‘clearly some overlap’ between the review of the casino licence and the AUSTRAC proceedings.

“Mr Martin has advised that until the resolution of the AUSTRAC proceedings, it is not possible to determine reliably the question of suitability,” Soulio said.

“On that basis, I have put on hold the investigation with regard to an overall determination of suitability.

“I am currently considering my options regarding any potential action I may take. While this process is underway, it would not be appropriate to comment further.”