Telstra Shareholders Launch Class Action

by Mary Swire, for LawAndTax-News.com, Hong Kong

13 February 2006

According to reports last week in the national media, a group of around 100 Telstra shareholders have launched a class-action suit against the Australian telecoms firm over its disclosure policies.

This is despite the fact that the Australian Securities and Investments Commission (ASIC) announced late last year that it had concluded its investigation of Telstra and did not plan to take any enforcement action.

The investors in question are angry that the firm disclosed concerns regarding its financial situation to the Australian government - which is its biggest shareholder - and to selected journalists, a month before such information was revealed to shareholders.

"The release of confidential material by a senior executive of Telstra, without providing the document to the whole market, is an unacceptable practice, particularly where only part of the document is released," ASIC chairman Jeffrey Lucy announced in December 2005, following the conclusion of the regulator's investigation.

"It can create a risk of confusion and did, in this case, lead to uninformed and unhelpful speculation about Telstra's prospects," he added.

The case is expected to be heard in the near future, possibly in late March.

Meanwhile, the Australian government announced last week that it is in no hurry to part with its majority stake in the firm, and is waiting for the best price.

"We are not irretrievably committed to selling by a certain date. I have never taken the view that we will be a distressed seller...We have the legal authority to do it and we'll do it at a time which will obtain the best price reasonably obtainable in the foreseeable future," Prime Minister John Howard was quoted by Reuters as announcing.

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