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Roger Forbes  
Partner
T +61 2 9296 2150

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Kathleen Harris  
Special Counsel

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Sydney
Ashley Black  
Karen Coleman  
Kate Mills  

Melbourne
Chris Fox  
John Waters  

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On 19 May 2008, Aristocrat Leisure Limited (Aristocrat) announced that it had reached a settlement of a class action brought against it by Dorajay Pty Limited (Dorajay) on behalf of investors who purchased shares in Aristocrat between 19 February 2002 and 26 May 2003. Aristocrat announced that it would incur a net cost (after tax and expenses) of $40 million.

While the terms of the settlement will remain confidential until approval is sought from the Federal Court, it has been speculated that the settlement amount was between $150 million and $170 million.

The class action was commenced in March 2004 and was brought on behalf of nearly 1000 investors in Aristocrat. Funding for the litigation was provided by IMF (Australia) Ltd. The trial of the class action had been completed and at the time settlement was reached, judgment was reserved. Importantly, the case against Aristocrat raised the status of the "fraud on the market" theory in Australian law. The acceptance of that theory may allow plaintiffs to prove their case without proving actual reliance on misleading or deceptive conduct. The settlement of the case before judgment leaves unresolved whether the "fraud on the market" theory will be accepted by Australian courts.

In order to finalise the settlement, Aristocrat and Dorajay must provide notice to the class members of the settlement and gain approval of the settlement from the Federal Court.