Class action legal firms circle Newcrest Mining

Whether it was meant as a sly nudge to some of the company’s preferred analysts, or was all completely above board, the briefing of selective investment analysts held by Newcrest Mining (ASX: NCM) prior to the announcement of severe cost cutting and write downs last month has brought nothing but trouble.

Not only did Newcrest’s share price get hammered in the aftermath, but anger felt by shareholders now looks set to manifest itself in the form of legal action against the company. Two legal firms have announced they are investigating Newcrest Mining in regards to its continuous disclosure obligations in accordance with ASX rules.

Maurice Blackburn confirmed last month it was looking to Newcrest’s handling of the situation and now law firm Slater & Gordon (ASX: SGH) is also investigating a potential class action suit according to the Australian Financial Review.

Both firms have experience taking on class actions and have stood up against some of Australia’s biggest banks. In 2012 Maurice Blackburn was involved in the settlement of a class action against National Australia Bank (ASX: NAB) on behalf of 15,000 shareholders in relation to disclosure on NABs exposure to financial derivatives.

Slater & Gordon is currently undertaking a class action against the New Zealand subsidiary of ANZ Bank (ASX: ANZ) for over 11,000 customers over the payment of excessive penalty fees.

After the analyst briefing debacle, Newcrest Chairman Don Mercer announced the company would appoint an ‘independent’ advisor to review disclosure practices and Investor Relations processes as well as vowing to act on findings and make them public.

Foolish takeaway

While the review is a sign that Newcrest wants to put things right and reassure investors going forward, it could be too little too late as the legal sharks start to circle. If a class action is taken up, it could potentially be another big blow for the already troubled gold miner.

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Motley Fool contributor Regan Pearson does not own shares in any companies mentioned in this article.

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