You can argue that all the shareholders are stupid and should have known better, but I think Maurice Blackburn sums it up pretty well on their website.
"The information, including revelations of an exploitative and unsustainable franchise model, saw the company’s share price go from well over $4 to under $1.30 when the company came out of the trading halt it entered on February 28, 2018.
More than $550 million has been wiped from the company’s market capitalisation. Publicly available information suggests that RFG adopted an exploitative business model as early as June 2015 yet it failed inform the market of its true state of affairs.
This is information the market should have been made aware of in order to fairly price the stock."
If share holders had been aware of the company's conduct, we could have made better investment decisions. But how were we supposed to have been aware of this? This information is not provided in the audited financial statements, as you suggest. I would be surprised if the auditors were aware of the company's conduct in achieving their profit.
It is arguable that the past financial statements were falsely represented, as a high proportion of the profits were derived by "an exploitative and unsustainable franchise model" which was unknown to the market.
You can argue that all the shareholders are stupid and should...
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