Potentially is the weasel word......;) There is not much case...

Potentially is the weasel word......

There is not much case law on shareholder class actions in Australia which relate to "bad" disclosure or "misleading conduct" by directors because they get settled mainly because the company / directors' insurance company want to do a deal and don't want 100% of the loss in Court. In broad terms (another weaselly phrase), the issue comes down to has the directors disclosure (or non-disclosure) given rise to a "misinformed" market which if the market was fully informed given rise to a lower price at the time. So if the YOW market plunges tomorrow then it would be relatively easy to assert that the AGM presentation gave rise to a misinformed market. CEM (or similar shareholder) would assert if he/she had known that the true annualized figures were as per today's correction he would have not bought. Therefore the loss is the difference between the price he/she acquired the shares and the price tomorrow.

If you look at some of the "big" class actions (eg NAB CDO case) there was a relatively lengthy period in which it was asserted that the market was misinformed and any one who traded in that period could claim damages. At the end of the day the case as most of the other class actions that are started was settled with a payment to the shareholders.

The other reason why class actions are settled is because of situations that are similar to my hypothetical cross examination on post# 16272321 - namely the directors and therefore the company can't win.

I reiterate what I concluded in post# 16272321

I hope that any company I invest in never faces a class action. They are an incredible drain on the company and its managements time (and I have probably lost money). However, the threat of a class action helps keep company officers on their toes as there is potential for them to be held accountable. And while ASIC is cautious in the actions it pursues class actions do seem to be the only effective way to keep officers accountable.

So I am not going to set the lawyers on to Yow but I do wish that they (and every other company I invest in and indeed all companies) check all details on the information and presentations they issue and if there is any doubt qualify what they are saying.

Subsequently in post # 16273273 I also said: The point I am trying to make (and got lost in my enthusiastic writings) is that companies need to be so careful in what they say as it may come back to bite them in a way that they don't expect.

I am not certain that yow has been "so certain in what they say" in their presentations.

Note: the above is not legal advice nor is it intended to be. DYOR, NFA, GLTAH.

Cheers,

BSP