28 Sep 2017, The Australian, Australia, Business News, Ben Butler Litigation
Shares in listed law firm Shine plunged more than 12 per cent yesterday after it was hit with a class action alleging the company misled the market about the value of work in progress.
In a lawsuit filed in the Queensland Supreme Court, law firm Quinn Emanuel alleges Shine’s misleading statements date as far back as August 2014, 17 months before a shock revaluation of its work in progress smashed shares by 73 per cent on January 29, 2016.
Quinn Emanuel partner Damian Scattini said Shine claimed to be standing up for the “little guy”.
“But, its shareholders are the very ‘everyday Australians’ it claims to protect. It is ironic that a law firm, which claims to specialise in class actions, would mislead its own investors.” In a brief statement Shine told the market the matter would be “vigorously defended” and it would “update the market in due course”.
Quinn Emanuel alleges that discrepancies in Shine’s work in progress recovery rates and other factors, including a change to workers compensation legislation in Queensland, were material and should have been disclosed to the market.
Shine’s Queensland personal injury claims business delivered 38 per cent of its revenue in 2016 – down from as much as 57 per cent in 2014.
Quinn Emanuel alleges that Shine’s failure to disclose deficiencies in the way it calculated how much work in progress was worth “was misleading or deceptive, or likely to mislead or deceive” and contravened the Corporations Act, the ASIC Act and the Australian Consumer Law.
The lawsuit identifies six occasions between August 2014 and October 2015 on which it is claimed Shine misled investors.
The lawsuit is backed by US funder Regency.
Shine stock went for a run after the firm listed in 2013 at $1 per share, in an IPO endorsed by US legal activist Erin Brockovich, changing hands for more than $3.20 in March 2015.
Shine shares closed down 9c yesterday at 62c.