Shareholders launch class action against Newcrest

Legal action has been launched against gold miner Newcrest on behalf of current and former shareholders.

Law firm Slater & Gordon is representing the class action and has filed proceedings in Melbourne's Federal Court.

The move comes after Newcrest received the biggest corporate fine in Australia’s history by the Australian Securities & Investments Commission after admitting it had contravened continuous disclosure requirements last year.

ASIC had been investigating Newcrest’s conduct around disclosure rules regarding market-sensitive information.

The focus was on what the company told analysts immediately before its June 7 release, which included $6 billion in writedowns and production downgrades.

The miner’s shares fell more than 12 per cent in the lead up the announcement.

It has been revealed 40 million shares valued at around $660 million were traded during the time the private briefings were being held, this has led ASIC to believe some analysts were acting on the information before it was made public.

Under a settlement proposed in the Federal Court, ASIC and Newcrest agreed to an amount of $1.2 million as a penalty.

The settlement reveals details of the briefing saga, and shows that from May 28, Newcrest briefed analysts from various investment banks including Credit Suisse, Bank of America Merrill Lynch, Macquarie, RBC Capital, Colonial First State and Morgan Stanley in order to ''nudge'' their forecasts lower to meet the company's new production and cost expectations.

Company emails reveal the briefings were aimed at getting analysts “in the ball park” of the new figures before a public announcement was made.

While Newcrest admitted it failed to immediately notify the market, it said it did not knowingly or intentionally contravene continuous disclosure laws.

''Newcrest takes its disclosure obligations very seriously and sincerely regrets the contraventions,'' Newcrest chairman Peter Hay said.

Slate & Gordon said it is seeking compensation for any loss and damage arising from the admitted contraventions.

However the law firm alleges Newcrest engaged in misleading and deceptive conduct from as early as August 2012 when the company released gold production guidance.

“Our clients allege that Newcrest had no reasonable grounds for the gold production guidance it released on 13 August 2012,” senior class action lawyer Ben Phi said.

“While our clients welcome Newcrest’s admissions, we allege that these contraventions form part of a wider course of misconduct.

“We have been retained by a significant number of retail and institutional shareholders and the losses claimed are substantial.

“The claim has been brought on behalf of all persons who acquired Newcrest shares between 13 August 2012 and the close of trade on 6 June 2013.”

Newcrest said it will “vigorously defend the proceedings”.

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