Listed law firm Slater and Gordon is considering a potential investor class action against Australia's biggest dairy producer, Murray Goulburn.
The move by Slater and Gordon and litigation funder IMF Bentham follows Murray Goulburn's profit downgrade on April 27, which resulted in units in its listed entity, MG Unit Trust, plunging more than 40 per cent.
Earlier this week, Murray Goulburn downgraded its annual profit forecast to between $39 million and $42 million.
That was down from its February forecast of $63 million and well under its prospectus forecast of $86 million.
Murray Goulburn blamed the latest downgrade on weak growth in demand for adult milk powder in China, the rising Australian dollar, and a downward revaluation of stocks of milk products expected to be sold in fiscal 2017.
The dairy co-operative said the February downgrade resulted from weak dairy commodity prices.
On April 27, Murray Goulburn also announced that managing director Gary Helou and chief financial officer Brad Hingle would be stepping down from their positions.
Slater and Gordon and IMF are investigating whether Murray Goulburn misled investors in relation to the prospectus and February forecasts.
They are also investigating whether Murray Goulburn failed in its continuous disclosure obligations by not announcing the latest downgrade prior to April 27.
Lastly, they are considering whether unitholders in the MG Unit Trust can recover any consequent losses.
"Our initial investigations have identified inconsistencies between Murray Goulburn's statements to the market regarding its likely profits in the 2016 financial year, and the factors that would affect its performance," Slater and Gordon senior class action lawyer Tim Finney said in a statement.
Mr Finney said the scale of the April 27 downgrade could not be explained by the reasons so far provided by Murray Goulburn.
"We are investigating whether the true cause of Murray Goulburn's downgrade was an aggressively optimistic profit forecast built into its product disclosure statement that the company was simply never going to achieve," Mr Finney said.
Units in the MG Unit Trust were one cent lower at $1.29 at 1155 AEST.
A spokesperson for Murray Goulburn was not immediately available to comment.
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