GPT to pay investors up to $75m to settle class action
Thousands of long-suffering GPT investors will share in up to $75 million after a class action was settled on Wednesday that centred on the allegation that GPT engaged in misleading and deceptive conduct and breached its continuous disclosure obligations in its earnings outlook for the 2008 year.
Slater & Gordon negotiated the settlement on behalf of more than 2300 class action group members in a deal that followed a four-week trial in the Federal Court.
Initially, Slater & Gordon began proceedings against GPT in the court in December 2011. The claim was brought on behalf of investors who purchased shares in GPT between February 27, 2008, and July 6, 2008.
It is the second such action in the real estate investment trust sector after disgruntled shareholders took on the former Centro Properties (now Federation Centres) and accountant PwC over alleged inadequate disclosure requirements during the global financial crisis.
In both cases the action centred on the period between late 2007 and 2008, when the global financial system was being hit by the subprime debt crisis, which then morphed into the global financial crisis. In the ensuing couple of years, the REIT sector was hard hit, with the share prices of many trusts more than halved over concerns about their financial health.
The GPT class action followed an announcement from the group on July 7, 2008, in which the company downgraded its forecast earnings and distributions for the 2008 financial year by almost 30 per cent. In response, GPT's share price fell dramatically.
Slater & Gordon's Ben Phi said it was alleged that when GPT provided its distribution guidance on February 27, 2008, it was aware that it faced material and substantial risks that it failed to disclose.
GPT maintains it complied with disclosure requirements in 2008.
Elizabeth Knight — Page 30