As investigation draws to conclusion.

Dick Smith shareholders are a step closer to being able to seek compensation in a class action as the investigation being undertaken by Investor Claim Partner (ICP) draws to a close.

The proposed class action is in addition to claims filed by lenders to Dick Smith earlier this year, alleging the company purchased “bad stock” to inflate income and earnings.

Following orders granted by the Federal Court in February, ICP, with the assistance of accounting and econometric experts and advice from Johnson Winter & Slattery (JWS), has investigated the business records to determine whether the company made representations in its Prospectus and subsequently about supplier rebates that inflated its reported gross profit, margins and EBITDA and inventory values that caused Dick Smith’s net assets, net profit and earnings to be overstated.

ICP CEO John Walker, co-founder of the Australian litigation funding industry and pioneer in funded shareholder claims, said, “The focus of the investigations has been on whether shareholders were misled by Dick Smith from the outset, and until its collapse, with key information regarding its true financial position being withheld or misrepresented.”

Dick Smith shareholders who lost money have had the benefit of ICP Capital’s litigation funding to support court access to key documents, advice from JWS and specialist expert accounting and econometric opinions in investigations that are now drawing to a close.

“The capital markets will be following closely the claims by banks and shareholders against Dick Smith and its directors given the potential for listed retailers to use stock valuations and rebates in the short to medium term to inflate earnings.

“It is fundamental that investors have clear, accurate and timely disclosures so the market can set appropriate share prices and investors can allocate capital appropriately. Any failure by a listed retailer to disclose material reliance upon rebates to support reported income and earnings can lead to misallocation of capital by investors,” Walker said.

Shareholders that purchased Dick Smith shares between 25 November 2013 and 4 January 2016 can register their interest in claiming at www.icp.net.au/register-dicksmith.