Shareholders closer to Dick Smith class action

dicksmithShareholders in failed consumer electronics retailer Dick Smith are a step closer to taking class action against the business on the grounds they were misled about the company’s profitability.

Litigation firm Investor Claim Partner says it is nearing the end of its investigation into whether Dick Smith misled shareholders until its collapse in January 2016 by withholding or misrepresenting key information regarding its true financial position.

The proposed class action is in addition to claims filed earlier this year in the Federal Court by Dick Smith’s lenders, National Australia Bank and HSBC.

The banks have accused the company of buying “bad stock” to inflate income and earnings.

Dick Smith went into voluntary administration in January 2016 after failing to secure a funds injection from its banks.

ICP has been going through Dick Smith’s business records, including relevant insurance policies that it obtained through the Federal Court.

The firm’s chief executive and co-founder John Walker says more than $300 million in Dick Smith shares issued through the company’s 2013 prospectus are now worthless.

“The focus of the investigations has been on whether shareholders were misled by Dick Smith from the outset, and until its collapse, with key information regarding its true financial position being withheld or misrepresented,” he said.

He said ICP had looked into supplier rebates that allegedly inflated Dick Smith’s reported gross profit, margins and underlying earnings.

The class action is open to shareholders who purchased Dick Smith shares between November 25, 2013 and January 4, 2016.

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