Australia’s leading law firm Maurice Blackburn Lawyers has settled a long-running class action on behalf of shareholders against failed education and training provider Vocation Limited for $50 million.
The class action, which was run jointly with Slater & Gordon alleged, among other things, that Vocation Limited (in liquidation) (Vocation) made misleading or deceptive statements in, and omitted information that was required to be disclosed in, its prospectus, contravened the continuous disclosure requirements of the Corporations Act 2001 (Cth), or otherwise made statements that were misleading or deceptive, thereby causing loss to persons who acquired an interest in ordinary shares in Vocation shares during the period 27 November 2013 and 4 December 2014 (inclusive).
The class action was brought against the company itself, its former CEO, former CFO, and former Chair as well as its auditors PriceWaterhouseCoopers.
Vocation’s share price collapsed in October 2014 after it agreed to return $19.6 million in public funding after the Victorian government reviewed its training services.
“Vocation was heavily reliant on tax-payer subsidised training courses, yet failed to disclose to the market that Victorian regulators were concerned about its operations even before the IPO in December 2013,” said Andrew Watson, national head of class actions at Maurice Blackburn.
“In fact, Vocation said publicly the review was not expected to have any material outcomes. However, when the market learned the extent of regulator concerns, investors clearly took a very different view, driving the share price down 57 per cent in a single day. Effectively early investors paid an inflated price for Vocation shares and the class action sought to recover the inflation paid by investors.”
Mr Watson said Australia’s class action regime provided an important mechanism through which shareholders could recover losses caused by poor corporate behaviour.
“Because we have an effective class actions regime in Australia, investors of all sizes can have greater faith in how our markets function, as these actions send a strong message about the importance of following good corporate governance in shareholders’ interests,” he said.
The settlement is subject to court approval and class members are expected to receive compensation in the first half of next year.