Law firm urges Crown Resorts shareholders to launch class action
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Version 0 of 1. Crown Resorts should have known its focus on drawing Chinese high rollers to its casinos was a hugely risky strategy, according to a law firm seeking to launch a shareholder class action against James Packer’s gaming giant. Solicitors Maurice Blackburn invited Crown shareholders on Friday to join in a potential class action to seek compensation for the share price drop that followed the detention in China of 18 Crown employees amid a clampdown on the illegal promotion of gambling and the illicit outflow of money from the country. Crown shares fell 14% in one day, wiping more than $1.3bn off the company’s market value. Maurice Blackburn class actions principal Julian Schimmel said Crown should have notified shareholders of the risks associated with its strategy well before the detentions, which included the arrest of three Australians. “We have reason to believe that: one, Crown knew the risks of its activities in China; two, it knew of the importance of VIP revenue to its business; and three, it therefore knew or should have known that if [its alleged illegal marketing of gambling tours] were revealed, there would be a revenue problem that would be material to Crown’s share price,” Schimmel said. “This is information that the company’s shareholders should have been told so that they could factor it into the share price and buy their shares on a fully informed basis.” Schimmel said a crackdown announced by Chinese authorities in February 2015 and similar arrests of employees of Korean casino operators in June that year had demonstrated the risks involved. “I think what [Crown] should have done at that time is tell the sharemarket exactly what they were up to in China, and that is the essence of the claim,” Schimmel said. He said Crown had not informed shareholders of the risks until the arrests made the issue public, and shareholders therefore paid an inflated price for their shares. “It’s not often that you get to beat the house, but a successful class action can do that for shareholders wanting accountability and better standards of corporate conduct from Crown,” Schimmel said. He said it was evident from the market reaction to the detentions that Chinese VIP gambler activity was important to Crown, which he said had repeatedly made statements about the significance of those gamblers for the company’s strategy and earnings. |