The ASX-listed law firm denies accusations of misleading investors
Quinn Emanuel Urquhart & Sullivan has filed a $250m class action lawsuit against Queensland-based Shine Corporate. The claim, which is backed by US litigation funder Regency Funding, has been filed in the Supreme Court of Queensland on behalf of aggrieved shareholders.
The suit claims that Shine breached the Corporations Act 2001 and ASX rules by misleading investors in market announcements made about the firm’s fiscal 2014 and 2015 results.
Shine said it is reviewing the court documents, and will respond to the proceedings in due course through the usual process. “Shine Corporate Ltd has, at all times, met its continuous disclosure and compliance obligations, and will be vigorously defending this matter,” it told Australasian Lawyer.
Quinn Emanuel said Shine shares plunged 73% in 29 January last year, following a 10-day trading halt. After “provisioning and business reviews” were done, Shine’s updated market guidance halved its projected earnings of $54m for fiscal year 2016 to $26m. The freefall wiped out more than $250m in market capitalisation.
“[Quinn Emanuel] contends that Shine knew or ought to have known, well prior to its trading halt in January 2016, that discrepancies in its work in progress (WIP) recovery rates, coupled with other related ‘business factors’, such as ‘sub-optimal…fee earners’, ‘legislative reforms’ and ‘market competition’ would likely have a material impact on its FY2016 results and accordingly, should have been disclosed to the market,” said Quinn Emmanuel in a statement.
Damian Scattini, Quinn Emanuel partner, said, “Shine claims to be ‘always standing up for the little guy.’ But, its shareholders are the very ‘everyday Australians’ it claims to protect. It is ironic that a law firm, which claims to specialise in class actions, would mislead its own investors.”
Quinn Emanuel advises shareholders, who bought and held Shine shares between 27 August 2014 and 29 January 2016, to register their interest in the class action.
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