Crown Resorts has promised to “vigorously defend” itself against a class action to be launched by investors this week over the company’s actions in mainland China.
The class action covers individual and institutional investors who bought shares between 6 February 2015 and 16 October 2016, with law firm Maurice Blackburn alleging that Crown engaged in “misleading or deceptive conduct” and failed in its disclosure obligations ahead of the arrests of 19 employees for promoting gambling.
Crown’s share price plummeted 13.9%, from AU$12.95 to AU$11.15, on the day of the arrests.
“Shareholders should have been apprised of the risks that Crown was taking in China and the threat they posed to the company’s revenue streams,” said Maurice Blackburn’s head of class actions, Andrew Watson.
A total of 16 Crown Resorts employees were jailed for between nine and 10 months in the wake of the arrests, with the last five – including the head of Crown’s international VIP operations Jason O’Connor – released from prison on 12 August.
The saga also hit Crown’s bottom line hard, with VIP turnover falling 48.9% for the year ended 30 June 2017. The company subsequently noted its intention to reassess its VIP strategy, with Executive Chairman John Alexander saying at the time, “We will wait until the China situation is resolved and then we are going to sit down and consider our long-term position. Until this is finally resolved we are stepping back from an aggressive position in the VIP market.”
A filing to the Australian Securities Exchange on Monday stated that, “Crown will vigorously defend the proceeding.”
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