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Slater and Gordon, Practice Group Leader, Ben Phi today confirmed that the law firm was continuing its investigation into a shareholder class action against Elders Limited, following the company’s profit downgrade on 22 June 2010.
On 22 June 2010, Elders announced to the market that it expected its 2010 financial year results would be significantly lower than what it had forecast in its September 2009 Prospectus.
On 5 July 2010, Elders disclosed to the ASX that ASIC was conducting enquiries in relation to the company's compliance with its continuous disclosure obligations following the profit downgrade. Today, Elders disclosed to the ASX that "...ASIC had concluded its enquiries in relation to Elders' profit downgrade of 22 June 2010" and did not propose to take further action in respect of the matter.
Mr Phi said that Slater and Gordon was not privy to the nature and extent of ASIC’s investigations in this area, nor had the law firm seen ASIC’s full response to Elders.
“However, it is our opinion, based on our independent investigations, that there is a reasonable basis to allege that Elders breached its continuous disclosure obligations by failing to disclose to the market prior to 22 June 2010 that it was increasingly unlikely to meet its profit forecast for the 2010 financial year.
“Furthermore, there are reasonable grounds to allege that Elders did not have a reasonable basis for making the forecast in its Prospectus on 4 September 2009."
"The claim against Elders is at an advanced stage and, as is our customary practice, we will offer the company the opportunity to respond to our allegations prior to the commencement of proceedings"