Telstra Class Action Suit
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Disgruntled shareholders have waited until the major telco announced its half year results before launching a class action suit seeking $300 million against the company for failing to properly inform the market.

According to an AAP story running on the SMH site, law firm Slater & Gordon is representing a group of about 100 shareholders represented in the suit.

At issue is the much publicised ‘private briefing’ given to the Federal Government, in which new Telstra CEO Sol Trujillo informed the 51 per cent share holder that things were not all rosy at the factories. The Federal Government had this information a month before the opposition and ASIC pressured Telstra to publicly release the information to the stock market.

The AAP story outlines how at a hearing in the Federal Court, barrister Alister Abadee said his clients were angry that senior government ministers and the prime minister were given the sensitive information first.

“These things were disclosed to the commonwealth in August last year but not disclosed to the market until September,” he told the court.

“We know that at some point, certainly no later than the 11th of August, Telstra formed certain opinions (about its financial position but didn’t tell shareholders until September).”

In a case which could take up to five years to run its course, follows an investigation by ASIC late last year into whether the telco had breached stock market rules by secretly briefing the government on August 11 2005.

The secret briefings were not only reserved for the Government, insightful internal documents are also alleged to have been distributed to select members of the press, without shareholders having access to the information.

Although the ASIC issued only a strident warning (rather than a fine) to Telstra, the admonition demonstrates the class action suit may have some legs.

The report says Telstra spokesman, Rod Bruem, believed the shareholders who are suing Telstra would ultimately be disappointed.

“Those shareholders will ultimately be very disappointed after having been led up the garden path by this greedy and opportunistic law firm in what is a baseless action,” he said.

“The 100 or so shareholders that they have promised, on my maths, $3 million each are holding 1.6 million Telstra shareholders to ransom.”