Posted on: March 29, 2022, 08:58h.
Last updated on: March 29, 2022, 01:48h.
Star Entertainment’s acknowledgment that it failed to comply with a number of regulations in Australia continues to lead to issues. A new class-action lawsuit hopes to hold the casino operator accountable for damage to shareholders’ investments.
New South Wales (NSW) is investigating Star Entertainment following reports that it ignored, among other things, anti-money laundering (AML) protocols. For years, the casino operator, by its own admission, willfully sought ways to hide the source of gamblers’ funds.
A law firm filed a suit today in Victoria Supreme Court on behalf of investors, reports Australian Associated Press. The Slater and Gordon law firm speaks for any shareholders who purchased shares between March 2016 and now, arguing that Star knowingly misled investors – and regulators – about its level of compliance with AML policies.
The suit, with David Lynch as the lead plaintiff, could ultimately attract thousands of investors. Because several Star executives have admitted to their roles in the company’s questionable business practices, it will be an easy case for the law firm to argue. The only question is how much it could cost Star.
“For the last six years, Star has held itself out to be a model casino operator that took its obligations seriously and followed not only the letter of the law, but the spirit of the law,” said Slater and Gordon senior associate Ben Zocco.
Falling Star For Stockholders
Public hearings only began last week, and it didn’t take long for Star to become a lawyer’s target as a result of the ongoing debacle. It faces a new class-action lawsuit that will test its legal team’s ability to justify Star’s antics.
Star’s stock on the Australian Securities Exchange began in 2022 at AU$3.79 (US$2.84). It’s had a rough ride since then but tumbled in the wake of the ongoing investigation. On March 16, the price was $3.37 (US$2.53) before dropping to $3.19 (US$2.39) two days later.
It has recovered slightly since then, now at $3.26 (US$2.45). But it is still well below where it could be if it weren’t for the public embarrassment Star faces.
Zocco asserts that shareholders made their purchases based on certain understandings, such as the company’s potential financial growth and its ability to comply with the rules. Since it has failed to do so, “investors are entitled to compensation for their losses.”
Not the First Lawsuit
This is just the latest litigious battle Star will face over the ineptitude of its officials, including one who already announced his resignation. Last October, the Maurice Blackburn law firm announced a class-action suit against the company. It alleged the same arguments as the new Slater and Gordon suit.
At the time, there were only unconfirmed rumors by media outlets that Star had acted inappropriately. However, it was enough for the company to lose $1 billion (US$750.2 million) in shareholder value. In one day, on October 11, the share lost 20%.
Crown Resorts, whose shenanigans served as the catalyst for increased scrutiny of casino activity in Australia, had to deal with its own class-action headaches. Maurice Blackburn went after the Star rival as it fell apart for similar failings Star is accused of.
The law firm launched two suits – one for the billion-dollar loss in valuation, and another for the Crown China arrest scandal. The Crown agreed to settle the matter, which a court may finally approve in April. The first lawsuit is still pending.