Class Action Law Suit Waiting for Crown Resorts Ltd.
The Australian casino industry is always full of surprises and news. According to the latest reports, there are news that a group of shareholders of Crown Resorts Ltd. are going to launch a lawsuit, a class-action one against the casino group. This is following the arrests of 18 of Crown Resorts’ employees on the Chinese mainland. This piece of news was reported by the Australian Associated Press service. It stated that the Shanghai arrests that happened on the 16th of October for the allegations of gambling crimes, resulted in a fall in the shares’ value of the Sydney based firm. This decrease rounded up to 14 percent, which is worth more than 993 million dollars of the value of the firm.
The Shanghai Arrests
The arrested Crown Resort employees include 3 Aussie nationals. These employees are Jerry Xuan, Pan Dan and Jason O’Connor. They were charged with organizing gambling activities and promoting them in the Chinese mainland. According to the laws that are laid out by the President “Xi Jinping”, back in 2015, such activities and promotions are illegal. The Chinese local officials believe that the detained Crown Resorts employees were working to entice the Chinese players, which included some high profile VIP players, to place bets in Australia. It is also believed that the employees used an illegal settlement network, or an under banking service so they can transfer the money outside of China.
The Class Action Lawsuit
The report stated that the Sydney based law firm, Maurice Blackburn, is going to lead the class action lawsuit. It is going to aim to gain compensations for the price drop that happened to the shares of the company following the Chinese arrests. Julian Schimmel from the law practice stated that Crown Resorts Ltd. should have made it clear through a notification, to tell the shareholders and warn them of the risks that this strategy might bring, well before the arrests happen.
He stated that they have reason to think that Crown Resorts Limited was aware of the risks of such activities on the Chinese mainland. It also knew the importance of the VIP gambling revenue to the business. Lastly, it should have known that the real nature of such activities can harm and affect the revenue if they are revealed, and this is exactly what happened. Such information should have been known to the shareholders, so they can put that information in mind while they are dealing with their shares.
He also added that similar arrests happened to employees from Paradise Group, as well as Grand Korea Leisure Limited. These arrests were on similar charges, which clearly demonstrated the risks of the Aussie firm’s activity in China. Therefore, they should have informed the shareholders and the investors what they were up to in the Chinese market.