Shareholder Class Actions in Australia - The Perfect Storm?

Abstract

The aim of this article is to explain why the number of shareholder class actions is increasing. Indeed, the thesis advanced in this article is that there has been a convergence of factors that has led, and will continue to lead to greater litigation in relation to shareholder claims – a perfect storm. The rise of the shareholder class action may be explained through the transformation theory of how experiences become grievances which in turn become disputes. This article explains how developments in law and society have combined to promote shareholder class actions. The ‘perfect storm’ analogy is adopted because of the unique interaction of factors which would be less powerful if they had occurred alone. The effect of these factors, in combination, has been to increase the likelihood of shareholder class actions. This article also stands in contrast to past scholarship that has argued that the legal avenues for shareholders who have suffered loss to obtain redress are characterised by economic disincentives and difficulties in establishing substantive rights.

Keywords: Legg, Shareholder Class Action, Consumers, Institutional Investors, Misleading and deceptive Conduct, s1041H Corporations Act, Continuous Disclosure, Compensation, ASIC, Litigation Funding