Two class action proceedings.
TW McConnell Pty Ltd as trustee for the McConnell Superannuation Fund v SurfStitch Group Ltd (in administration).
TW McConnell Pty Ltd as trustee for the McConnell Superannuation Fund (Plaintiff).
SurfStitch Group Limited (First Defendant).
Justin Peter Cameron (Second Defendant).
International Litigation Partners Pte. Ltd.
Summary of Claim
The claim alleges that the public downgrades came too late and should have been issued in 2015 when it was clear SurfStitch would be unlikely to meet the optimistic forecasts then in place.
The proceeding claims on behalf of two classes of SurfStitch shareholders:
- those who acquired shares between 23 October 2015 and 9 June 2016 and retained shares on any of 25 February 2016, 3 May 2016 or 9 June 2016; and
- those who already held shares on 23 October 2015 and retained shares during the above periods relying on the forecasts and statements issued by SurfStitch.
Lawyers representing the class action group, have issued subpoenas seeking access to transcripts of Australian Securities and Investments Commission examinations of Mr Cameron and other SurfStitch executives and directors under Section 19 of the ASIC Act, which compels people to provide information.
The following claim periods are:
- 27 August 2015 to 25 February 2016
- 26 February 2016 to 3 May 2016
- 4 May 2016 to 8 June 2016
The claim arises out the decline in the share price of SurfStitch Group Limited (ASX:SRF) between November 2015 and June 2016 from $2.13 to $0.32. There are two underlying allegations to the proposed claim:
- Having indicated to the market in August 2015 that it expected its EBITDA in FY2016 to increase by 100% over FY2015, SurfStitch failed to disclose that in fact it was trading at a loss; and
- To cover this up, SurfStitch adjusted its 31 December 2015 results by entering, on 22 December 2015, a series of transactions that enabled it to add revenue of $20.5m (and profit of $18.5M) for a deal to license the content on its web site. The effect of these transactions was that SurfStitch would incur a loss of approximately $2M.
Status of Claim
Argument before Justice Stevenson at 9.30 AM on 25 July 2018.
Hearing before Justice Stevenson at 10.00 AM on 20 September 2018.