Institutional investors launch class action against GPT Group

Institutional and retail investors have launched a class action against the GPT Group over allegations of misleading or deceptive conduct in relation to 2008 earnings forecasts. 

Proceedings on the behalf of the investors were filed by law firm Slater & Gordon in the Federal Court of Australia last week after previous mediation efforts failed. 

The claim has been brought on behalf of those investors who acquired stapled securities between February 27, 2008 and July 6. 2008 and had executed litigation funding agreements with Comprehensive Legal Funding LLC (a US-based litigation funder) by December 7, 2008. 

The claim alleges that GPT engaged in misleading or deceptive conduct in relation to, and breached its continuous disclosure obligations following, the 2008 earnings and distribution guidance that accompanied the release of its 2007 Full Year Statutory Accounts. 

Specifically the action relates to the adequacy and timing of disclosures to the market about earnings forecasts made in February and May 2008, which were later significantly downgraded in July 2008.

Forecast operating income was downgraded 27% from $633 million to $464 million; distributions per share was downgraded 30% from 28.9¢ to 20.0¢; and earnings per security was downgraded from 29.4¢ to 21.2¢.

Slater & Gordon Practice group leader Ben Phi said: “Representative proceedings have been commenced against GPT following a failed attempt to resolve the matter at mediation.” 

The class action dates back to October 23, 2008. 

Mediated discussions commenced in May 2010 but were unable to resolve the matter between the investors and GPT Group.

GPT Group says it intends to “vigorously defend the claim”.

 

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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