Class action launched against Treasury Wines; economists back carbon price: Midday Roundup
Monday, October 28, 2013/
Litigation funder IMF and Maurice Blackburn Lawyers today announced the funding of a class action against ASX-listed Treasury Wines Estates.
The action concerns Treasury’s announcement in July this year of $160 million in write-downs due to difficulties selling stock in its United States division.
The action will allege that Treasury Wines breached its continuous obligations disclosures by not flagging the loss to its shareholders, which allegedly resulted in shareholders losing “millions of dollars” when the company revealed the full extent of its difficulties in July.
“By not disclosing the possibility of a material write-down when we allege it should have, the company caused shareholders to suffer financial loss,” IMF (Australia) investment manager Simon Dluzniak said.
“Treasury Wines’ management told the market on multiple occasions throughout the 2013 financial year that the company’s earnings would grow whilst it adequately managed its US distributors’ inventory levels.
“We allege that the market was not told that the US distributor inventory levels of some brands were so high that Treasury Wines was at risk of having to destroy excess stock or give rebates or discounts to the distributors for excess, aged and deteriorating inventory.”
In September, Treasury Wines fired its CEO David Dearie, with the board saying the company needed a CEO with a “stronger operational focus”.
Economists back carbon price
A survey of 35 economists conducted by Fairfax found 86% backed a price on carbon as the most effective way of curbing emissions.
In comments echoed by many others, Justin Wolfers, an Australian economist at the University of Michigan, said direct action policies failed for not effectively harnessing market forces.
”One problem is that we’ll end up subsidising a lot of abatement that would have occurred anyway. Another is that the plan imposes extra costs because it uses scarce tax dollars,” he said. “All told, Direct Action involves more economic disruption for less of an environmental payoff.”
Australian shares hit (another) five-year high
The Australian sharemarket soared in early trade, hitting a five-year high at 11.15 AEST.
The benchmark S&P/ASX200 index lifted 1.16% to 5448.8 points, while the broader All Ordinaries index rose 1.11% to 5445.5 points.
Analysts are expecting further highs. “The S&P/ASX 200 is on a clear uptrend with buyers looking to take advantage of any corrective dips,” says CMC Markets chief market analyst Ric Spooner.