Maurice Blackburn Investigates Potential Class Action Against Bellamy's

Friday 16 December 2016 @ 12.04 p.m. | Corporate & Regulatory | Trade & Commerce

Australian law firm Maurice Blackburn is seriously investigating a potential class action law suit against infant formula and baby good provider Bellamy’s Australia Limited (Bellamy's). The case will be taken once the law firm concludes its investigations into Bellamy’s for alleged breaches of its continuous disclosure obligations and for allegedly engaging in misleading conduct regarding its trade with China.

Background to the Claim

Bellamy’s recently informed the market of its lower than expected revenue in December this year. The trading update revealed that the company’s share collapsed from $16.50 this time last year to a shocking $6.80 on 2 December 2016. Since this release, the company went into a trading halt and has requested that the ASX suspend its shares immediately meaning that no trading in the stock can take place and all existing buy and sell orders are automatically purged from trading platforms.

A recent BusinessDay report revealed that Bellamy’s market share in Australia may have collapsed between April and October this year. The report relied on supermarket and pharmacy sales that showed Bellamy’s market share in infant formula went down by 25 per cent. Despite this decline, the company did not issue any updates to the market or investors that warned of this situation and its likely effect on the company’s bottom line.

Class Action Claim

Maurice Blackburn has published on their website that:

“There is good reason to suspect that Bellamy’s knew or ought to have known about its poor performance and the expected impact of the regulatory changes much earlier than when it ultimately informed the market. Our investigations will consider whether Bellamy’s breached its continuous disclosure obligations, engaged in misleading or deceptive conduct, or made misleading statements, in contravention of the Corporations Act 2001 (Cth) and the ASX Listing Rules.”

The class action claim will be made on behalf of shareholders in Bellamy’s who purchased shares between 14 April 2016 and 1 December 2016.

According to the firm’s class action principal Mr Ben Slade:

“It has been pretty extraordinary market reaction, we saw $500m wiped off the share price. It beggars belief that an announcement that causes such market reaction is something that wasn't known at some time earlier by the company."

Any shareholders that have been affected by the recent price drop are being urged by Maurice Blackburn to register their interest in joining the class action on their website. 

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