Australian casino operator Crown Resorts is in all sorts of trouble recently, the latest being a class action lawsuit, a local media reports. Maurice Blackburn Lawyers filed a new class action against the gambling company alleging its failures in corporate governance and risk management caused damage to investors as the share price sank more than 8% in October.
Crown Responsible for Share Price Slump
Market reaction was due to news that the formal enforcement investigation into Crown launched by the country’s financial crime watchdog AUSTRAC identified non-compliance at Crown Melbourne casino related to anti-money laundering (AML) controls. The law firm launched a second class action against the operator, following the lawsuit lodged in 2017.
“We believe these governance failures have caused real loss to shareholders who would have expected best-practice compliance with anti-money laundering obligations, especially given Crown’s repeated public statements that it took compliance with such laws seriously.”Miranda Nagy, Principal Class Actions Lawyer, Maurice Blackburn Lawyers
By that time Maurice Blackburn acted on revelations that Crown employees had been apprehended in China on suspicion of engagement in marketing for illegal gambling operations, news that caused a collapse in Crown’s share price on October 16, 2016, affecting investors who had purchased shares since February 6, 2015. That class action lawsuit is still ongoing.
Crown Admitted to Wrongdoings
Following on the admission from Crown that the operator might have facilitated money laundering, Maurice Blackburn filed to the Supreme Court of Victoria last week, alleging Crown’s misrepresentation from December 11, 2014 to October 19, 2020 that it had systems in place in compliance with AML laws.
“…it appears Crown’s systems left the company potentially exposed to criminal activity happening on its premises and through its bank accounts.”Miranda Nagy, Principal Class Actions Lawyer, Maurice Blackburn Lawyers
Further, the law firm alleges on behalf of the affected shareholders that the casino operator’s compliance failed with regards to its VIP international business, namely in dealing with junkets, a failure Crown had not disclosed to the market. In other words, Crown’s conduct was not in manner to protect the interest of its shareholders, hence they are entitled to share buyback at a fair value from the company.
“We believe there is a basis to say Crown did not merely mislead and fail to disclose information to the market, it really conducted its affairs in a manner that was deleterious to shareholders’ interests as a whole.”Miranda Nagy, Principal Class Actions Lawyer, Maurice Blackburn Lawyers
Greg Lieberman, a father of 4 and a lead plaintiff for the class action, explained his disappointment at Crown’s behavior which let down shareholders like him, as he personally did not expect to “invest in a cowboy outfit” and believed the company had strong governance.
The class action lawsuit is open for any investor who purchased Crown shares between December 11, 2014 and October 18, 2020, or those who owned shares as of December 10, 2014 and held them at least until October 18, 2020.