UP to 29,000 Telstra investors will share in about $3.7 million, after the Federal Court approved the settlement of a class action by shareholders against the telco.
A group led by shareholder, Andrew Taylor, sought up to $300 million from Telstra, on the basis they were denied market sensitive information when they purchased shares between August 11 and September 2, 2005.
The investors argued they should have been privy to a briefing Telstra gave the federal government, in which the company discussed declining fixed line revenue and under investment.
Telstra has insisted all along it did not breach continuous disclosure obligations, but said it was in the best interests of its shareholders to settle the case rather than fight it out in court.
Law firm Slater & Gordon will receive $1.25 million for its services.
It was approved yesterday by Justice Peter Jacobsen. "I've come to the view that ... the overall settlement is fair and reasonable and I propose to approve it,'' Justice Jacobsen told the court.
A handful of affected shareholders from the August-September 2005 period opposed the settlement, unhappy with its size and the proportion going to Slater and Gordon.
"Looked at in isolation, it seems a large amount,'' Justice Jacobsen observed, of Slater and Gordon's fees.
''(But) a substantial amount of work has gone into the case,'' he said, noting that Slater and Gordon's costs had actually exceeded the $1.25 million the firm will receive. Telstra seized on the approval as evidence the case should never have gone to court, saying it never had merit.
"We've had to pay out an amount of money to have an issue that should never have been litigated go away, pleasingly in this case ... Slater and Gordon has not recovered its fees," Telstra's group general counsel, Will Irving said.
But Slater and Gordon hailed the settlement as historic, the first time a company had compensated shareholders over disclosure issues.
"The settlement puts big businesses like Telstra on notice that they can't keep shareholders in the dark by failing to disclose important information about their true financial state,'' Slater and Gordon executive director Ken Fowlie said.
Nick Lucchinelli AustralianIT December 14, 2007