Shareholders had a rare victory over an ASX-listed company in the Federal Court this week.
The full Federal Court sided with investors in their appeal against Worley Ltd (ASX: WOR).
The Federal Court had dismissed the class action initially, but the shareholders successfully appealed before the full bench.
The class action, represented by Shine Lawyers, is seeking compensation for investors who claim the engineering services company misled the markets in its financial forecasts back in 2013.
"Between August and November of 2013, WOR announced an FY 2012 profit of $322 million and provided the market with inflated earnings forecasts showing earnings growth in FY 2013," said Shine Lawyers class actions leader Craig Allsopp.
"The company announced its inflated and erroneous earnings forecast in August 2013 and repeated it in October 2013, only to issue a downgraded forecast in November 2013."
The shareholders allege that Worley had no "reasonable grounds" to make the initial forecast and that this resulted in a 26% drop in the stock price.
The Motley Fool has contacted Worley for comment.
Image source: Getty Images
All ASX-listed companies now 'on notice'
The class action represents investors who bought Worley shares between 14 August 2013 and 19 November 2013.
Allsopp said this case focused on listed companies' obligation for "accountability and the importance of implementing proper processes to ensure price sensitive information is disclosed to the market in a timely way".
"This puts all corporations on notice and provides a timely warning to those companies that do not prioritise transparency in their disclosures to shareholders."
The court will now return to a single judge who will rule on the compensation and legal cost orders.
The Worley share price has never really recovered from that period in question, closing Friday at $12.70. It was trading as high as $21.59 during that time in 2013.
The company revealed in the February reporting season that its net profit rocketed 259% upwards, while last week it announced a withdrawal from all business in Russia.
