Crown resorts is facing a class action lawsuit from aggrieved shareholders over a sharp drop in its share price following the arrests of 18 employees in China for alleged “gambling crimes”.
Maurice Blackburn Lawyers (MBL) said it had filed the class suit after receiving hundreds of registrations from individual and institutional shareholders.
MBL claimed that investors were unaware of the risks that Crown was taking in China until 18 of its staff, including Australian executive Jason O’Connor, were arrested by Chinese authorities on charges of promoting gambling on the mainland in October 2016.
Andrew Watson, head of class actions at Maurice Blackburn, said: “Shareholders should have been apprised of the risks that Crown was taking in China and the threat they posed to the company’s revenue streams.”
MBL said the action centred on Crown’s share drop of almost 14 percent on October 17, 2016. The law firm said this had a significant impact on Crown’s future revenue from VIP gaming, which almost halved to A$33.3bn ($25bn) in the 12 months to the end of June.
Watson continued: “Chinese authorities could not have made the risks of marketing gambling any plainer to Crown or other casino operators, yet Crown ignored these warnings.”
Shareholders who want to be compensated for losses incurred from shares bought between 6 February 6, 2015, and October 16, 2016, may still register online to be part of the class action.
In a statement, the James Packer-led casino operator said it would “vigorously defend the proceeding”.