Lawyers Weekly Australia report
Two class actions have been filed against Star Entertainment Group, following allegations of inflated share prices and non-disclosure of systemic money-laundering, links to organised crime, fraud and corruption.
On Monday, Phi Finney McDonald filed a class action on behalf of shareholders against The Star Entertainment Group in the Supreme Court of Victoria, alleging that The Star’s share price was inflated due to breaches of continuous disclosure obligations and misleading and deceptive conduct.
Then, on Tuesday morning, Shine Lawyers filed a similar class action, for alleged misconduct the firm said caused the company’s stock price to plummet, impacting investors who purchased shares between March 2016 and June 2022.
In December last year, ASIC commenced civil penalty proceedings in the Federal Court of Australia against 11 current and former directors and officers of The Star Entertainment Group, including its former group general counsel and company secretary, for alleged breaches of the Corporations Act.
This came after the launch of a class action from Slater & Gordon in March 2022, and the commencement of civil penalty proceedings against The Star by the financial crime watchdog, AUSTRAC, in late November, as well as the launching of a second class action against the entertainment group in early November by national plaintiff firm Maurice Blackburn.
The Star allegedly failed to make disclosures to the market about systemic non-compliance money-laundering, links to organised crime, fraud, corruption, conduct disguising gambling money as hotel expenses and terrorism-financing risks, as well as associated regulatory risk involved in its misconduct, even after they were raised in a 2018 report prepared by leading consultancy firm KPMG.
After these misconduct allegations were revealed in October 2021, Star’s share price fell by 23 per cent and, following additional revelations, has now lost more than $1 billion off its market value.
In a statement to the ASX on Monday night, The Star said it intends to defend the proceedings.
“The claim alleges that in the period between 29 March 2016 and 13 June 2022, The Star made misleading representations, including about its systems and processes for compliance with anti-money laundering and counter-terrorism financing obligations, that it failed to disclose relevant information it had about those matters to the market, and conducted its affairs contrary to the interests of the members of The Star as a whole,” the statement said.
“The claim is substantially similar to the separate securities class actions filed by Slater & Gordon announced on 30 March 2022 and Maurice Blackburn announced on 7 November 2022.”
Phi Finney McDonald director Tim Finney said the case was launched following an extensive investigation.
“We have conducted detailed due diligence into the proceeding, including the Bell Review in NSW, the Gotterson Review in Queensland, the AUSTRAC proceeding against Star and the ASIC proceeding against current and former directors of Star,” he said.
Shine’s joint head of class actions, Craig Allsopp, said investors were the biggest losers of Star’s “gamble with the truth”.
“We allege Star knew, or ought to have known, that this wide-ranging misconduct occurred and that it would have a hugely detrimental impact for its shareholders once exposed,” he said.
“Star represented to investors that it was a safe bet, when it was anything but, and we’ll be looking to hold Star to account for their losses.”
