UK-based miner Glencore PLC’s (GB:GLEN) share price dropped by over 4% today after major fund managers filed a lawsuit against the company for providing wrong information in the previous prospectuses. In light of the fact that Glencore may have to compensate the claimants for billions of dollars, investors’ reaction to the news was justified.
The Glencore share price went down by 4.15% during today’s trading session at the time of writing.
Glencore is a leading mining company that produces and trades a wide range of metals and minerals like copper, nickel, iron ore, etc.
Around 197 claimants, including funds managed by big names like Legal & General PLC (GB:LGEN), abrdn (GB:ABDN), Invesco, Fidelity, etc., are taking legal action against the miner. It also includes funds like GIC, Oman Investment Authority, the Ontario Pension Board, and many more. They are pursuing compensation based on claims that the company and its top executives issued deceptive statements to conceal corrupt practices.
In their lawsuit, the claimants, who hold more than £3.7 billion in Glencore, allege that the company provided wrong and false information in its prospectus in its 2011 listing, followed by 2013’s merger with Xstrata. As a result, these claimants encountered huge losses after they bought shares of Glencore during these periods.
This case follows Glencore’s acknowledgment of extensive corruption in several of its international activities, encompassing regions such as Brazil, the United States, and Africa. Last year, the company was held guilty in bribery and manipulation cases and paid $1 billion in fines.
Glencore has not filed its defense yet, and investors await any further response from the company.
Is Glencore a Good Stock to Buy?
In terms of share price appreciation, analysts are optimistic about the company’s stock. Based on the analyst consensus from TipRanks, GLEN stock has received a Strong Buy rating, supported by a total of eight recommendations. This includes six Buy versus two Hold ratings.
The Glencore share price target is 512.50p and analysts are projecting a growth of 22% from the current level.