A statement of claim has been filed in the Auckland High Court against A2 Milk, alleging breaches of the Financial Markets Conduct Act 2013 and the Fair Trading Act 1986.
The opt-in class action seeks compensation for eligible A2 Milk shareholders who allegedly suffered losses as a result of the significant decline in the value of A2 Milk shares between August 19, 2020, and May 9, 2021, when the share price fell from about $21.50 to about $6.62.
It is being led by a team that includes Philip Skelton, QC, Thorn Law and Gilligan Rowe. It is being funded by Australian based CHC Investment Fund III Pty Limited, a subsidiary of Court House Capital Pty Ltd.
According to Skelton, a financial institution has already joined the action on behalf of a significant number of clients, representing a substantial shareholding in A2 Milk.
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Advertise with NZME."In summary, the legal action alleges that as a result of A2 Milk issuing misleading guidance and failing to amend or withdraw that guidance in a timely manner, shareholders were not given accurate information about the company's ability to meet its revenue and margin forecasts," said Skelton.
"The action claims that because of the inaccurate information given to the market, investors were unable to make informed decisions as to whether to buy, sell or retain A2 Milk shares; many investors lost substantial sums as a result of acting on that misleading information."
Consolidating cases
It is not the only class action facing A2 Milk. It joins a similar case under way in Australia after Slater and Gordon and Shine Lawyers said their separate cases were consolidating into one.
All the suits allege that A2 Milk should have been aware of the impact of covid-19 on the business and that its forecasts were misleading.
According to Skelton, unless material information is disclosed and forecasts amended to reflect updated assessments, it is reasonable for shareholders, especially those who have invested in a publicly listed company like A2 Milk, to assume that existing forecasts remain valid.
A2 Milk was not immediately available for comment but has repeatedly said it considers it has at all times complied with its disclosure obligations, denies any liability and it will vigorously defend the proceedings.
A2 shares were up 0.2 per cent at $4.59 in early afternoon trading.
