Newcrest Mining Faces Investor Class Action Suit
Newcrest Mining's problems are far from over. The mining company is facing a class action case filed by angry investors amidst allegations of withholding sensitive information.
Newcrest Mining was accused of tipping off its preferred analysts while keeping information from its investors. Law firm Maurice Blackburn was tasked to investigate the matter and evaluate the option of filing a shareholder class action suit against Australia's biggest gold mining company. Newcrest Mining may be sued for failing to honour its continuous disclosure obligations.
Head of class actions Andrew Watson said the $6 billion worth of write-downs by Newcrest was a serious concern for investors who are now calling for a probe.
Under the rules of continuous disclosure, companies are obliged to investors to share any information that might affect the share price. In this case, it would seem Newcrest Mining had no idea of the impact to shareholders once it announced the write-down.
The Maurice Blackburn law firm has handled similar class action suits from the past. In November 2012, the firm help settled a case for $115 million with National Australia Bank.
Newcrest Mining told ASX authorities that it did not break any disclosure agreements. The company recently reduced production forecasts and dividends while shutting down its Brisbane offices and cutting jobs.
Newcrest responded to a letter from the ASX and brushed off the suggestion of suspending market trading before the announcement. The company defended its stance and said it had no plans of stopping the trade since the board will only reject the cost-cutting plans and deter the announcement.
Newcrest firmly stated that it did not have a prior briefing with selected analysts before updates were provided. The ASX can ask the Australian Securities and Investments Commission to investigate the matter if the company's response proves to be unsatisfactory.
Meanwhile, Newcrest Mining shares closed at $11.93 on Wednesday after dropping more than 20 per cent or $1.8 billion in the past five days of trading.
