Here's why EML (ASX:EML) shareholders are suing their own company

EML shareholders are suing their own company…

| More on:
A group of disappointed board members.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It was a relatively good day to be a shareholder of EML Payments Ltd (ASX: EML) shares this Thursday. Despite the losses of the broader S&P/ASX 200 Index (ASX: XJO), the EML share price ended up closing 1.55% higher at $3.27 a share.

That move comes despite news today that some EML shareholders have banded together to file a class action against EML. It will be heard in the Supreme Court of Victoria.

Shine Lawyers allege that an Irish subsidiary of EML, PFS Card Services Ireland Limited (PFS), "made misleading representations regarding their corporate governance and regulatory compliance". According to the law firm, "thousands of Australian investors who put money into EML Payments" have joined the class action.

EML faces class action from its own shareholders

This relates to the well-publicised issues EML had with the Central Bank of Ireland earlier this year. Back in May, it became public that the Irish Central Bank had raised concerns over EML's PFS business. The Central Bank alleged that the company was failing to adequately comply with anti-money laundering and counter-terrorism financing regulations. As we covered at the time, this had big implications for the entirety of EML's European business dealings.

The reaction from shareholders was brutal. Within a day, the EML share price had lost more than 46% of its value. Even today, after EML has received something of an all-clear from the Central Bank, EML shares remain down around 37% from where they were before the concerns were aired publically.

Shine Lawyers point to the fact that "the revelation caused EML Payments Limited's share price to plunge 46 per cent in a day, yet it took the Brisbane-based company four days to request a trading halt" as the reason for the class action.

Here's some of what Joshua Aylward of Shine Lawyers class Action Practise, had to say:

The Central Bank of Ireland raised the alarm over potential non-compliance with anti-money-laundering and counter-terrorism financing regulations with PFS on May 13… This suggested the company's European operations could be in jeopardy, but EML failed to disclose this to the Australian share market in a timely manner…

It is alleged that EML's conduct showed disregard for its regulatory obligations and to the thousands of Aussies who invested their money into its businesses.

The class action is open to any investor that purchased EML shares between 19 December 2020 and 18 May 2021.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended EML Payments. The Motley Fool Australia owns and has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Broker Notes

Why Guzman Y Gomez shares are a sell

Goldman Sachs has given its verdict on the burrito seller.

Read more »

A man pulls a shocked expression with mouth wide open as he holds up his laptop.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Mac Copper, Pro Medicus, Web Travel, and Yancoal shares are pushing higher today

These shares are having a good time on hump day. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why ALS, Fisher & Paykel Healthcare, IPD, and Predictive Discovery shares are falling today

These shares are having a tough time on hump day. But why?

Read more »

Man looking at his grocery receipt, symbolising inflation.
Share Market News

How are ASX 200 investors responding to the latest Aussie inflation numbers?

The ASX 200 was up 0.2% today before the ABS reported the latest inflation figures.

Read more »

A couple makes silly chip moustache faces and take a selfie on their phone.
Broker Notes

Macquarie sees more upside in Telstra shares – What are they worth?

Telstra shares are up 34% over the past year, and Macquarie thinks there's more to come.

Read more »

Smiling man with phone in wheelchair watching stocks and trends on computer
Share Market News

5 things to watch on the ASX 200 on Wednesday

Another good session is expected for Aussie investors today.

Read more »

Silhouettes of nine people climbing a steep mountain to the top at sunset, and helping each other along the way.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a pleasant Tuesday session for ASX investors today.

Read more »