Investors feel misled
Crown Resorts shareholders have filed a class-action lawsuit against the Australian casino company, alleging that it misled them about its anti-money laundering (AML) compliance.
casino company acted against the interests of its shareholders
Law firm Maurice Blackburn filed the class action with the Victorian Supreme Court on December 11. The suit argues that the casino firm was engaging in deceptive or misleading conduct between December 2014 and October 2020 by claiming that its AML controls were “robust” and compliant. It also alleges that the operator acted against the interests of its shareholders.
On October 19, Crown Resorts shares dropped 8%, decreasing the market value by AU$500m (US$378m). This came as news emerged of an enforcement investigation into potential AML violations at the Crown Melbourne casino property. Australian financial crimes agency AUSTRAC had launched the inquiry earlier that day.
Crown Resorts’ share price initially fell 1.2% on Monday, December 14 in the wake of Friday’s class-action lawsuit filing.
Request for share buyback
The class-action suit is looking to compensate investors for their losses stemming from Crown Resorts’ failings. It also requests the court to consider instructing the company to buy back shares at a fair value from those investors impacted by the recent turn of events. Moreover, the suit asks that Crown introduce a proper AML training program by an accredited professional to ensure that similar breaches do not occur again.
Miranda Nagy, the lead lawyer in the class action, said of the damage to investors: “We believe these governance failures have caused real loss to shareholders.”
A tough year for Crown
Besides the COVID-19 pandemic leading to widespread closures of its properties in 2020, Crown Resorts has had a tough year overall.
systematic failures to prevent money laundering at the operator’s Perth and Melbourne casinos
Crown is currently under investigation by the New South Wales (NSW) Independent Liquor and Gaming Authority (ILGA). The region’s gaming regulator has already uncovered systematic failures to prevent money laundering at the operator’s Perth and Melbourne casinos. Crown has admitted that it was likely that money laundering did take place.
Crown has been unable to open its new Sydney casino until the publication of the inquiry findings in early 2021. The ILGA investigation will ultimately decide whether the operator is suitable to have a casino license in the region.
The company is concurrently dealing with the AUSTRAC investigation, brought about after the country’s financial watchdog uncovered issues during a compliance assessment last year.