Financial services company IOOF faces a potential class action of up to $100 million from tens of thousands of shareholders over its handling of allegations of corporate misconduct.
IOOF has rejected allegations that it breached its obligations to keep the stock market informed and says it will vigorously defend any claim.
Maurice Blackburn Lawyers says IOOF should have disclosed the alleged misconduct when the company became aware of it, rather than when it became public knowledge through media reports in June.
Tens of thousands of IOOF shareholders may have been affected by the company's alleged failure to reveal problems with the compliance culture of its research team, Maurice Blackburn class action principal Brooke Dellavedova said.
"It looks like they've been doing the things they needed to do to fix their research team over a period of time. What they didn't do was tell the market at the right time," she said on Thursday.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
"Based on our investigations Maurice Blackburn considers the alleged conduct and IOOF's response to it was indicative of deep and systemic problems with the compliance culture of the research team, with weak internal controls and repeated instances of misconduct that were not properly addressed."
Ms Dellavedova said Maurice Blackburn believed investors may have paid an inflated price for IOOF shares before the allegations became public and the suit would seek to recover the difference in what they did and should have been paid, covering those who bought shares between December 2013 and June 19 this year.
She estimated the cost of the class action to IOOF could be tens of millions of dollars or even $100 million.
IOOF shares dropped 13.3 per cent on June 22, when the company said all the allegations raised in a media report had been dealt with appropriately at the time, including through internal and board review, notifying industry regulators and independent investigations.
IOOF rejected Maurice Blackburn's claim it breached its continuous disclosure obligations or engaged in misleading or deceptive conduct, saying it complies with the law.
"IOOF is confident that the proposed action described by Maurice Blackburn is misconceived both factually and at law," the company said in a statement.
IOOF managing director Christopher Kelaher told a Senate inquiry in July the issues raised were historical and identified internally, and were not indicative of any systemic failure.
The Australian Securities and Investments Commission is investigating the alleged breaches at IOOF.
