Vocus Group Ltd (ASX: VOC) is facing a potential class action from law firm, Slater & Gordon Limited (ASX: SGH).
In a media release this morning, Slater & Gordon announced a partnership with Investor Claim Partner (ICP) in proposing a class action against Vocus, the owner of Dodo, iPrimus and many other telecommunications brands.
Over the past two years Vocus shares have fallen sharply, as the following chart shows:
Having acquired M2 Group, NextGen and Amcom, Vocus ballooned into Australia's third largest public telecommunications company. Then the bubble popped.
"The proposed claim will be brought on behalf of hundreds, if not thousands, of people who purchased Vocus shares between 29 November 2016 and 2 May 2017, including mum and dad investors and large institutional funds," Slater & Gordon's media release stated.
The class action relates to two allegations:
- Misleading and deceptive conduct
- Obligations of continuous disclosure
"Our investigations to date suggest Vocus had unreasonable expectations about the costs involved in integrating its newly acquired platforms and technology systems," Slater & Gordon Principal Lawyer Mathew Chuk said.
"There appears to be evidence that Vocus was aware of most of these issues when the FY17 guidance was originally issued in November, thus misleading the market," ICP Chief Operating Officer, Simon Weeks said.
Foolish Takeaway
Vocus is facing yet another headache as it seeks to rebuild its reputation. It follows a string of other class action proposals, including Sirtex Medical Limited (ASX: SRX) and Slater & Gordon itself. It is too early to speculate on the outcome of a class action but it is something shareholders might need to consider.
Despite the class action, in my opinion it may be worth putting Vocus shares on your watchlist.
