Following governmental regulatory or enforcement action with civil securities lawsuits is a well-established practice in the U.S. The Australian suit against Crown Resorts indicates the practice might be on the rise outside the U.S. as well, writes Kevin LaCroix of D&O Diary.
Plaintiffs’ lawyers allege the company failed to warn its shareholders of the “risks” associated with marketing casinos in China after several Crown employees were charged with illegally promoting gambling. Similar follow-on lawsuits have been filed in Europe.
LaCroix said these types of suits “are an important factor in the significant increase in the number of U.S. securities class action lawsuit filings during 2017.” He said it remains to be seen if the follow-on phenomenon takes off abroad.