Star Faces Another Class-Action Suit from ‘Misled’ Investors

Amid an ongoing probe into Star Entertainment’s suitability to hold a license, the company is now facing another issue – a class-action lawsuit filed on behalf of investors who feel they have been misled by the company.

Star Investors Take the Fight to the Giant

The public hearings into Star Entertainment revealed a number of regulatory shortcomings which may have a long-term impact on its profitability, argues David Lynch, the lead plaintiff, who has commissioned the services of Slater and Gordon law firm to lead the charge against the company.

The news was first reported by Australian Associated Press with the lawsuit filed on Tuesday with the Victoria Supreme Court and comes amid the New South Wales investigation into the company. Among the offenses that Star Entertainment allegedly committed was the purposeful concealment of player fund sources, mislabeling gambling expenditures as hotel accommodations.

The revelations over the past week have prompted Star Entertainment’s chief executive officer, Matt Bekier, to hand in his resignation. As the conclusions of the investigation are yet to be summed up in a report due in the summer. In the meantime, Lynch is hoping that his lawsuit could attract other investors who are eager to argue their case.

Ben Zocco, senior associate at Slater and Gordon outlined the issue his client had with Star. He said that the company had spent the past six years presenting itself as a model company that followed the letter of the law, but ended up coming short of those claims in the end.

Public Hearings Make Shares Take a Tumble

The public hearings have been going on for a little over a week now and the Star stock price has already gone down to $AU3.19 or around $2.40 on March 16.

It has been able to bounce back, mostly because Crown Resorts’ case is very similar to Star’s and investors know what to expect – a possibly ruling deeming Star Entertainment unfit to manage its casinos in Australia on its own and having to work with a supervising team to regain its independence is on the table.

However, this is just speculative, but a plausible way to settle the probe. As to the private lawsuits, though, it may take more. Zocco argues that shareholders made purchases into the company predicated on specifics outlined by the company back to investors, which ended up being false in the end.

The Slater and Gordon lawsuit piles on a litany of charges brought against the company. In October, Maurice Blackburn, another law firm, also launched a class-action lawsuit against the company causing its valuation to drop by AU$1 billion at the time or some $750 million. The only silver lining here is that Crown Resorts’ case may offer some guidance as to what to expect next.