Crown Resorts facing new class action as investors seek compensation for lack of compliance, share price declines

Australia’s Crown Resorts is facing yet another legal battle after a local law firm launched a new shareholder class action accusing the company of misleading or deceptive conduct.

According to a report by The Sydney Morning Herald, renowned Australian-based law firm Maurice Blackburn lodged a claim with the Victorian Supreme Court on Friday in which it alleges shareholders have been duped and harmed by Crown’s actions spanning a period of almost six years from December 2014 to October 2020.

The claim specifically alleges Crown misled shareholders by telling them it had robust anti-money laundering systems in place – an assertion largely debunked during a recent NSW Independent Liquor and Gaming Authority inquiry into Crown’s suitability to hold a NSW state casino license. The SMH said the class action will take the unusual step of asking the court to demand Crown buys back shares from shareholders involved in the lawsuit.

The class action, which points to recent declines in share price, is the second against Crown currently being undertaken by Maurice Blackburn, with the first relating to an earlier AU$1.3 billion share price fall following the arrest of 19 Crown Resorts employees in mainland China for illegally promoting gambling in October 2016.

“It appears Crown’s systems left the company potentially exposed to criminal activity happening on its premises and through its bank accounts,” said Maurice Blackburn class actions principal Miranda Nagy. “We believe these governance failures have caused real loss to shareholders.”

The class action comes as yet another blow to Crown Resorts, which was due to open its AU$2.2 billion (US$1.6 billion) Crown Sydney this week but has been forced to put those plans on hold at the request of the NSW regulator.

Following the damning findings of the recent inquiry, the Victorian Commission for Gambling and Liquor Regulation – whose regulatory coverage includes Crown Melbourne – has issued a notice to show cause why it should not be disciplined for alleged failures of its internal junket controls, while AUSTRAC, the financial crimes arm of the Australian government, has launched a formal enforcement investigation into potential infringements of the country’s anti-money laundering laws.

For its part, Crown has permanently ceased all junket activity at its casinos, farewelled two directors and appointed a new Chief Compliance and Financial Crimes Officer to help overhaul its internal compliance procedures. It has also terminated controversial shareholder agreements with its largest shareholder, James Packer.

The post Crown Resorts facing new class action as investors seek compensation for lack of compliance, share price declines appeared first on IAG.

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