Investors take Arasor to court
If you ever feel you've been duped by a dodgy investment, there is reason to believe that you will soon be able to take a company to court whether or not you have read its product disclosure statement (PDS).
In a landmark decision handed down by the Federal Court in late September, a group of investors were granted an appeal to plead "market-based" causation for their dispute against failed laser technology company Arasor.
The law states that a group of company directors must not offer securities under a disclosure document if it contains misleading or deceptive information, and if they do any person who suffers a loss or damage from the deceit can be compensated.
Usually a victim who has suffered a loss relies on false information contained in the PDS to make their case. In the Arasor matter, the investors are arguing that misleading information provided in company reports influenced other investors to make financial decisions that impacted the market price of their securities. This is referred to as market-based causation, and doesn't require the investor to have read the PDS.
In their appeal against an earlier court ruling, the investors were given the go-ahead to plead market-based causation in seeking compensation, and will eventually take Arasor to court using this argument.
Regardless of whether they win or not, the judgment does give promise to other investors with a grievance. Many class action lawsuits, such as those against OZ Minerals, Treasury Wine Estates, Worley Parsons and Melbourne City Investments, could be revisited almost immediately, thanks to the Federal Court judgment.