Shareholders still want compensation.
Legal action initiated by a Melbourne lawyer in early 2015 against Myer Holdings has been reactivated with a series of advertisements in the Australian Financial Review running this week (see below). The matter relates to Myer shareholder’s concerns about the retailer’s bungled profit downgrade and disclosure record.
Melbourne City Investments Pty Ltd (MCI), an investment company set up by former Minter Ellison partner Mark Elliott, launched legal proceedings against Myer in the Victorian Supreme Court in March last year. He alleged shareholders have suffered loss and damage as the result of statements made at the time of Myer’s 2014 results and the company’s subsequent profit downgrade.
The writ was filed in the Federal Court by Portfolio Law Pty Ltd on behalf of MCI, which was and still is seeking to bring a group action for itself and on behalf of an unnamed group of shareholders.
At the time, Myer denied the MCI claim and said it would vigorously defend the litigation.
In an emailed response today to Appliance Retailer, Elliott said to that he had “lots of emails in support already. This is the first time the ad has been run and it will be run twice a week for a while.”
“I want to let all shareholders know that the case is running and that they are automatically included unless they opt out.”
Eliott claimed that the ligitation is very serious. “The claim is in excess of $100 million and you don’t commence an action like this in the Supreme Court of Victoria unless you are sure that Myer has broken the law,” he added.
Today’s advertisement MCI alleges that Myer “has failed to disclose to the market in a timely manner the downward revision of its earnings forecast for the 2015 financial year causing many thousands of shareholders in Myer to suffer loss and damage as a result.”
At the time, former Myer chief executive Bernie Brookes reassured investors the department store chain would achieve not only sales growth in 2015 but would return to profit growth, for the first time in five years, and net profits would exceed $98.5 million.
However, Myer’s new chief executive, Richard Umbers later warned that underlying net profit was expected to fall to between $75 million and $80 million, well below market forecasts of about $90 million.
After being queried by the Australian Securities Exchange, Myer said it had only realised it would miss its full-year profit forecasts by as much as $15 million the day before it released first-half profits.
In its statement of claim MCI, which paid $1.78 a share for 400 shares on November 14 2014, said Myer had no reasonable grounds to make the representation in September that profits would grow in 2015.
Elliott is well-known in Melbourne legal circles after having launched more than a dozen class action claims against underperforming companies including Vocation, Leighton Holdings, Treasury Wine Estates and WorleyParsons, alleging breaches of continuous disclosure obligations.
In July, the Supreme Court of Victoria last year criticised his “business model”, accusing him of setting up MCI for the purpose of launching class action lawsuits to generate legal fees for himself. MCI had bought about $700 of shares in Treasury, Leighton and Worley Parsons and Mr Elliott, the sole shareholder and director, also acted for MCI in each of the proceedings.