Class actions: No more ‘go-away’ money as companies take class actions to court

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Corporate Australia will no longer pay “go-away” money to avoid shareholder class actions after plaintiff firms lost five major cases in a row, a trend lawyers said would encourage more boards to fight cases in the courts.

over disclosure failures concerning breaches of money laundering and counter-terrorism laws that attracted a $700 million fine – means no shareholder case that has gone to judgment has succeeded.

Damian Scattini, of Quinn Emanuel, agreed the bar had been raised for shareholder claims. “Plaintiffs can’t bring a knife to the gunfight any more.”Before 2019, more than 50 shareholder claims had been commenced over 20 years – usually over alleged breaches of continuous disclosure laws – but all had been settled.

Ms Gilsenan said the result in CBA was “very disappointing for the class members”. It will also be expensive for funder Omni Bridgeway, given most claims cost a minimum of $10 million to run or defend. In Myer, Justice Jonathan Beach found that department store giant misled shareholders over its forecast profits for the 2015 financial year and breached its continuous disclosure obligations.

 

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