The CA does not assert falsified accounts - it asserts management misled the market.
An example would be where they first affirmed guidance in November 2015 before withdrawing it a month later.
15-Nov-2015 - "I am delighted to reaffirm the 2016 financial year Group guidance provided in our full year results presentation in August" - A. Grech
(
http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01687258)
It's hard to see this as anything but categorical and emphatic.
17-Dec-2015 - "...Lower than expected trading results... in November... There is a significant risk that full year guidance will not be met and accordingly the company withdraws its previous full year guidance".
(
http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01697227)
MB in the CA will argue that shareholders who invested on the basis of the August numbers and November re-affirmed guidance were misled.
As an investor who did exactly this - believed the initial report, thought things in UK were heading in the right direction - and was absolutely gobsmacked by the 180-degree turnaround weeks later - I have a certain sympathy for this viewpoint.
Slaters defence will likely be based around the opening para. of the December announcement - "Lower than expected trading results in segments of the business in UK in November, coupled with a review of the company's approach to financial forecasting..." is what triggered the change in guidance.
So "completely outside of their control" - "couldn't be foreseen" - "the initial guidance was reasonable at the time", "circumstances changed" etc.
It's unfortunately (for SGH investors) a bit of a theme for the management to make bullish statements that lead the market in a certain direction ("most comprehensive due diligence ever") - only to be forced to backtrack when the actual results don't bear
any resemblance to the rosy picture they initially painted.
IMHO it is literally impossible to reconcile what they told the market against the unprecedented destruction of value witnessed over the past two years.
Anyway - with the CA, I suspect that ultimately, a bunch of lawyers will argue for months over the meanings of words like "guidance", "positive contribution", "cash", and "profit" and Slaters will either be found not guilty, or to have intentionally or unintentionally misled the market.
As experienced lawyers who would be well aware of their legal obligations as company directors, I would be surprised if Grech and co. have exposed themselves to legal jeopardy - however this is exactly the sort of case SGH have successfully pursued against other company directors, so we shall see.
If they DO lose the case, directors insurance will cover the payment - which would NOT have been the case if ASIC had uncovered fraud.
Then MB will pocket the majority of any payment awarded to cover their costs (and repay the CA underwriter) - and investors in the CA will maybe see cents in the dollar on their original investment losses. They may of course derive some measure of satisfaction seeing AG, Skippen and others face some form of justice for their actions.
All of that said, the class action is really a bit of a sideshow at this point. More pressing is the recapitalisation plan and short-term cash-flow issues. Next few weeks will certainly be interesting.