Insurance firm QBE is being sued by Australian investors in a class action over the company’s 2013 share price collapse.
More than 700 investors have joined the $200 million class action to recover money they lost when QBE’s share price suffered its biggest single-day fall in more than a decade in December 2013.
Maurice Blackburn Lawyers filed documents in the Federal Court in Melbourne on Wednesday, claiming QBE made statements in August 2013 that gave investors false confidence in the shares.
“QBE made comments in August which we allege were too bullish given what they knew about what was going on under the hood,” lawyer Jacob Varghese told reporters in Melbourne.
“That gave the market a degree of confidence and it turns out that confidence was misplaced.”
Mr Varghese said the statements made during the half-year results announcement led to the market expecting a significant profit, not a loss, at the end of 2013.
Instead, on December 9 QBE announced it would post a $250 million loss in 2013 linked to asset writedowns in its North American operation.
The market responded by wiping $4 billion off the company’s value.
Stock prices dropped 22 per cent in a single day and 30 per cent over two days.
Mr Varghese said QBE failed to correct market expectations and failed to disclose that bad news was expected.
The $200 million being sought covers losses of the 700 current class action participants, which includes private sector firms, institutional investors and industry super funds.
Rockhampton investor and small business owner Richard Bungey lost $11,000 after buying QBE shares for himself and his wife through their self-managed super fund.
“We, like hundreds of others, have had our planning, financial security and futures derailed,” he said.
“I would never have bought the shares if I knew the extent of the problems at QBE.”
The class action is open to anyone who bought QBE shares between August 20 and December 9, 2013.
Maurice Blackburn says the action remains open for anyone who bought shares between August 20 and December 9 in 2013.
QBE declined to comment.