AMP Ltd’s [ASX:AMP] share price continues to spark conversation this week.
This morning saw a drop to $3.84, not far from the wealth management’s share price of $3.52 in the depths of the GFC.
It’s been a scandalous week for AMP in light of startling confessions to the royal commission, four separate class actions and the hostile media frenzy that has followed.
What caused the drop?
Aggrieved shareholders have been shocked to discover AMP’s admission of dishonest conduct to the royal commission. Leading law firms Phi Finney McDonald, Quinn Emmanuel Urquhart and Sullivan (QE), Slater and Gordon and Shine Lawyers have all lodged proceedings.
Breaking news today revealed that Maurice Blackburn Lawyers have also come on board, and are inciting a class action bidding war.
QE partner Damian Scattini has called the deception ‘reprehensible’, as reported by businessnewsaus.com.au.
‘AMP admitted it has been misleading it’s customers and the market for years,’ he commented. ‘It knowingly charged its loyal customer fees for advisory services it never provided, and then repeatedly lied about it to the corporate regulator.’
Media commentators have added fuel to the fire, publicly condemning the financial services company.
The Australian Financial Review reports that Peter Morgan, former head of the investment and trustee group Perpetual, tweeted on Saturday:
‘Australia’s largest bank, one of the largest holdings in most equity funds. Be a joke if the bloodbath at AMP is not used as a benchmark for other boards to go quick smart. The business club needs a kick at the bum and a thorough clean-out.’
To top it all off, AMP has lost half its board.
What’s next for AMP?
AMP has vowed to ‘vigorously defend the proceedings,’ and the Executive Chairman has issued an official apology to its customers. A number of initiatives to accelerate change have been also been announced.
Not all investors are running for the hills. Less than a month ago, about a third of analysts surveyed by Bloomberg were found to be recommending that investors still buy the stock. Perhaps AMP’s focus on reformation, which a new CEO and management team should bring, will encourage an upsurge in customer loyalty.
With a commitment to better practices moving forward, AMP could yet see redemption. And if the company can survive the next few months, will investors of the future look back at this moment as the perfect buying opportunity?
It can pay to look at both sides of the coin.
For Money Morning
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