Financial crisis could lead to rise in shareholder class actions
The current financial crisis could lead to a rise in shareholder class actions against listed companies, according to commercial litigation lawyer Alex Cuthbertson.
Most shareholder class actions are based on breaches of continuous disclosure rules. It is essential that companies clearly understand their disclosure obligations and have procedures in place to ensure price-sensitive information is disclosed immediately, Cuthbertson said.
Companies also need to be aware that information gathered by the Australian Securities and Investments Commission as part of an investigation could be made available to shareholders and could be the precursor of a shareholder class action, Cuthbertson said.
“Companies need to be aware that when they are dealing with regulators they must also have one eye on the plaintiff law firms standing in the background. The response to a regulatory investigation must be strategically managed,” she said.
A class action was brought by Centro shareholders against Centro Properties for breaches of continuous disclosure obligations between August 2007 and February 2008.
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