Posted on 14 Nov 2014
Slater and Gordon today confirmed it has been engaged by aggrieved shareholders who have instructed the firm to prepare a class action against education and training provider Vocation Limited ('Vocation').
The proposed claim will be funded by listed litigation funder Bentham IMF Limited (ASX: IMF) and will allege that Vocation breached its continuous disclosure obligations and engaged in misleading or deceptive conduct.
All current and former Vocation shareholders who acquired Vocation shares at any time prior to 22 October 2014, and held those shares at any time between 10 September 2014 and 22 October 2014 inclusive and suffered a loss, are eligible to participate in the proposed action.
The claim relates to serious compliance issues at two of Vocation’s Registered Training Organisations ('RTOs') in Victoria, which recently resulted in Vocation reaching a settlement with the Victorian Department of Education and Early Childhood Development ('DEECD').
Since late August 2014, Vocation publicly maintained that it expected DEECD’s review would not have a material outcome. Then, on 27 October 2014, Vocation announced a settlement under which DEECD would end its investigation in exchange for Vocation surrendering $19.6 million in Government funding and relinquishing the funding contracts held by Vocation’s RTOs BAWM and Aspin in early 2015.
DEECD had concluded that Vocation’s RTOs had enrolled students in inappropriate courses and that students had received poor quality training. It found Vocation relied too heavily on the third parties that referred students, and had failed to impose adequate controls to manage the performance of those third parties.
In the days immediately following the announcement, Vocation’s share price fell more than 60 per cent.
The class action will allege that Vocation was aware of the BAWM and Aspin compliance issues and was required to disclose that information to the market. It will also claim that Vocation misled the market regarding the nature and extent of the DEECD review, and failed to disclose that there were serious compliance issues at BAWM and Aspin.
Senior class action lawyer Tim Finney said he received instructions from retail investors to investigate the potential claim following the announcement, and since then, has been contacted by dozens of institutional investors who wish to take action against Vocation.
“In our opinion, there are reasonable grounds to allege that the problems in Vocation’s Victorian business were systemic, and that the company had been misleading the market about its true position since its public listing in late 2013,” Mr Finney said.
“The dramatic share price fall that followed Vocation’s 27 October 2014 announcement is clear evidence that the company’s shares had traded at a significantly inflated value up to that time.”
Investors who wish to participate in the proposed class action may obtain an information pack by visiting Bentham IMF Limited’s website here.