Australian law firm Slater & Gordon has said it is planning to bring a class action lawsuit against Billabong, an Australian clothing company. The firm claims that Billabong mislead and deceived investors — both Australian and international — when it provided guidance on its earnings in 2012.
Reuters reports that the company forecasted strong growth in 2011 for the 2012 financial year, but retracted that guidance months later. Upon retraction, Billabong declared that the 2012 financials would be significantly lower than predicted earlier, which sent its shares plummeting by over 50 percent.
Slater & Gordon will pursue Billabong in court — although the company has stated that it has not received any contact from the company — for misleading conduct in information disclosure. The firm’s senior associate Odette McDonald stated in the official release from Slater & Gordon.
“Our clients allege that Billabong’s internal initiatives had no viable chance of substantially increasing profit margins, contrary to what the company had conditioned investors for. They further allege that, had the market been informed of the true dependencies underpinning the earnings forecast, it would have disregarded the guidance as unrealistic, and this would have been reflected in Billabong’s share price.”
While Billabong waits to receive word of the lawsuit officially with proceedings from Slater & Gordon, it has responded that it will defend itself.
If the company is found to be in violation of the regulations on disclosing price-sensitive information, it could endure a high-profile case because of the clothing, surf wear, and accessories company’s international presence.
Of course, the debate around how well class action lawsuits actually defend consumer rights is a constant one. InsideCounsel’s Alexis Harrison delves into the question of how successful class action lawsuits are, and who the real winner is.