Murray Goulburn, its directors and the company’s ASX-listed entity MG Unit Trust (ASX: MGC) face a shareholder class action with papers filed in the Victorian Supreme Court today.

Class action specialist lawyer Mark Elliot has reportedly launched an action on behalf of unit holders in the MG Unit Trust, alleging the company and its board mislead the market and investors in a product disclosure statement (PDS) issued in May 2015.

Mr Elliot alleges that Murray Goulburn knew sales forecasts in the PDS were unlikely to be achieved – on the same day the PDS was filed. He also alleges that the entire board is liable to pay compensation because they ‘each consented to the inclusion of the misleading PDS representations’.

Mr Elliot also claims that the company breached the Corporations Act because it failed to disclose problems with its forecasts when it listed on the ASX on July 3, 2015, and again when it re-affirmed guidance on October 26 at the company’s annual general meeting.

The company was forced to downgrade its forecasts on February 26 this year and released another downgrade on April 27. The MG Unit Trust share price has plunged more than 60% since the start of this year, including a 42% fall from $2.14 to $1.24 on the day of the second downgrade.

That also saw the resignation of then CEO Gary Helou, but three more directors have resigned since then – Max Gelbart on May 3, Kiera Grant on May 4 and Duncan Morris on May 10.

The biggest issue affecting Murray Goulburn’s performance has been a worldwide slide in milk prices.  Competitor and New Zealand giant Fonterra (ASX: FSF) had warned that Australian farm gate prices (the price dairy companies pay farmers) were unsustainable, and Murray Goulburn was finally forced to admit that it couldn’t continue paying higher prices.

In its PDS, Murray Goulburn was forecasting a net profit of $89 million – the latest update suggests a net profit of between $39 million to $42 million for the 2016 financial year. That’s a substantial fall – no wonder shareholders are angry.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.