Slater and Gordon and ICP Capital launch proposed class action against Vocus Group Ltd
Posted on 14 Sep. 2017
Leading class action law firm Slater and Gordon and shareholder claim management and funding service provider Investor Claim Partner (ICP) have today announced a proposed shareholder class action against Vocus Group Ltd (ASX:VOC).
The proposed claim will be brought forward on behalf of hundreds, if not thousands, of people who purchased Vocus shares between 29 November 2016 and 2 May 2017, including 'mum and dad' investors and large institutional funds.
Vocus Group Ltd is one of Australia’s largest telecommunications companies and includes brands such as Dodo, iPrimus and Orcon.
On 2 May 2017, the company significantly downgraded its FY17 guidance.
Allegations against Vocus Group Ltd
The proposed class action includes two allegations:
- Vocus engaged in misleading and deceptive conduct because it had no reasonable grounds for the original FY17 guidance issued in November 2016.
- Vocus breached its obligations of continuous disclosure by failing to disclose that it would not achieve the FY17 guidance.
Slater and Gordon Principal Lawyer Mathew Chuk said the claim would allege that as a result of the company’s misleading and deceptive conduct and withholding of information, Vocus’ shares traded at prices significantly above their true value during the claim period.
“Our investigations to date suggest Vocus had unreasonable expectations about the costs involved in integrating its newly acquired platforms and technology systems,” Mr Chuk said.
“The company expanded significantly since 2015 by acquiring other businesses such as Amcom and Nextgen Networks, as well as merging with M2 Group Ltd.
“When Vocus issued its FY17 guidance it stated that it expected to gain efficiencies by bringing these businesses together, but we allege this was done without proper visibility of profitability.
“We have also identified an accounting issue relating to recognition of ongoing costs associated with the execution of long term, multi-million dollar service contracts.”
ICP Chief Operating Officer Simon Weeks said that despite these issues, the company continued to reiterate its original FY17 guidance.
“There appears to be evidence that Vocus was aware of most of these issues when the FY17 guidance was originally issued in November, thus misleading the market,” Mr Weeks said.
“Based on initial interest, VOC shareholders are perturbed by this, as it is yet another example of a listed company not following the listing rules that exist to protect shareholders.
“Adverse, price-sensitive information needs to be disclosed immediately, otherwise shareholders overpay”.