Surfstitch faces second shareholder class action
Surfstitch continues to be under-pressure with the news that the Australian online retailer is facing a second class action from shareholders.
Lead by Vannin Capital, the class action against Surfstitch is seeking compensation for lost money after the retailer's share price plunged 90% over an eleven-month period, thanks to a series of profit downgrades and poor acquisitions.
Shareholders saw the value of their shares dive from around AU$1.85 to 18.5¢ between August 2015 and June 2016, meaning the e-tailer's market value dropped $500 million, the Australian Financial Review reported on Wednesday.
Sydney law firm Quinn Emanuel Urquhart & Sullivan have been engaged to file the $100 million class action claim against SurfStitch in the Queensland Supreme Court, according to reports.
Vannin Capital's director of investments Pip Murphy told AFR that the class action claim would allege that SurfStitch breached its disclosure obligations and engaged in misleading or deceptive conduct, contravening the Corporations Act 2001 and ASX listing rules, in relation to announcements made to the market concerning a series of acquisitions.
It follows the first class action suit against Surfstitch lodged last year. Melbourne law firm Gadens said it was considering a class action on behalf of shareholders who bought shares in SurfStitch's $83 million initial public offering in December 2014.
Gadens said SurfStitch may have breached its continuous disclosure obligations and failed to keep all shareholders properly informed, particularly when co-founder and former chief executive Justin Cameron resigned unexpectedly in March 2016.
In February, the Australian online surf apparel retailer clocked an $8.3 million loss in the first-half period of 2017, narrowed from last year’s dismal $14.5m loss.
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