Legal action has been launched against gold miner Newcrest in relation to alleged questionable market disclosures last year.
Slater & Gordon is representing the class action, which was announced just before Christmas, that alleges Newcrest engaged in misleading and deceptive conduct – predominately breaching disclosure obligations.
On June 7 Newcrest informed the ASX it would be downgrading its forecast fiscal 14 gold production, see $6 billion in writedowns and impairments, and would not be paying dividends.
Currently ASIC is investigating claims that several investment brokers were briefed before the price sensitive announcement was made resulting in brokers downgrading Newcrest’s ratings.
The miner’s shares fell almost 20 per cent after the June 7 release was made.
Newcrest said that it has been instructed to commence a representative proceeding in the Federal Court of Australia.
Slater & Gordon said its claim alleges that between August 13 and June 6, 2013 the miner failed to disclose its true position to the market, breaching its disclosure obligations.
“The proposed claim will further allege that various statements made during the claim period were misleading and that the company did not have any reasonable basis to make such representations,” Slater & Gordon stated.
Newcrest has to date denied breaching disclosure laws by selectively briefing analysts with market-sensitive information, saying it "treats its disclosure obligations seriously and engages with the investment community in a manner consistent with those obligations".
Commenting on the legal action the miner said it “intends to defend any proceedings if they are commenced”.
A self-commissioned disclosure review conducted last year by Newcrest mostly absolved the gold miner of any major misconduct.
The review said the company had not carried out analyst briefings without bringing everyone into the loop and instead pointed to a delayed reaction to old information for the several broker downgrades.