ASIC might be happy to wait until the end of the Cole inquiry before it considers taking action against AWB for failing to report its dodgy Iraq dealings to the stockmarket, but the lawyers at Maurice Blackburn Cashman aren’t wasting any time. Two days after Crikey questioned whether AWB directors and management had misled shareholders, the Melbourne-based law firm announced it was preparing a shareholder class action, arguing the public company had breached its requirement of continuous disclosure.

“There is little doubt that information not disclosed to the market was material and that the market has been misled by AWB,” Maurice Blackburn Cashman principal lawyer Ben Slade told last week. “Shareholders who have suffered loss as a result of AWB’s conduct are entitled to recover those losses through the instigation of a class action.”

So are AWB shareholders – among them the Transport Accident Commission, the Victorian WorkCover Authority and Melbourne University – feeling litigious? The response so far has been substantial, Slade told Crikey when we spoke to him yesterday. “We’ve had good raw numbers,” he said, “but it’s the size of the losses of those who have contacted us” that are really significant.

How do you calculate losses in a case like this? It’s complicated, says Slade, but generally, the claimable loss is the amount overpaid for shares in AWB as a result of the company failure to disclose material information to the market. They would also factor in any “consequential impact” linked to the inquiry.

“Potential adverse findings by the Cole inquiry may ultimatley result in the ‘single desk policy,’ allowing the AWB a monopoly over Australian wheat trading activities being stripped,” says Maurice Blackburn Cashman’s Class Action Information. “Analysts estimate the ‘single desk policy’ is worth between 1/4 and 2/3 of the underlying AWB share price.”

Shares of AWB have already slumped nearly 30% since the Cole inquiry began on 16 January – closing last Friday at $4.69. And after yesterday’s news that the Iraq Grain Board has suspended its business relationship with AWB pending the completion of the inquiry, analysts are speculating the stock could fall to $2.14.

In 2003, Maurice Blackburn Cashman obtained $97 million for the shareholders of GIO in Australia’s first shareholder class action. So it’s not looking good for AWB.