The number of potential shareholder claims against Quindell plc has hit 850 in the wake of last week’s “breathtaking” financial restatements, it has emerged.
The restatements were announced on the same day as two more investigations were launched into what happened before it sold the legal business to Slater & Gordon, one by the Financial Reporting Council (FRC), the other by the Serious Fraud Office (SFO). The Financial Conduct Authority is already investigating.
Colin Gibson, chief operating officer of Your Legal Friend, which is working on the potential group action, said the latest investigations “bear out our feeling that quite a lot has gone substantially wrong at Quindell from a governance point of view”.
Mr Gibson said the number of potential claimants had been “increasingly fairly steadily”, but “there was a surge over the last week or so”.
Given the amount of new information, he said the letter of claim being drafted by Your Legal Friend, a trading name of Camps Solicitors, would have to be “substantially reworked”.
Mr Gibson went on: “We are very happy that the latest disclosures give us considerable new material on how investors were misled.
“The scale of the restatements was fairly breathtaking. We had expected significant restatements, but their whole profit record has been completely changed by the numbers they have now put forward.”
Among the restatements was a reduction of £109m in claims management revenue for the year 2013.
Mr Gibson said he was “very interested” by the timing of the FRC investigation, which, it emerged last week, began with a letter sent on 20 March 2014.
At exactly this point, Mr Gibson said Rob Terry, Quindell’s former chairman, was “pushing very hard on the story that the company was ready to move from the AIM market to the main market, and a critical part of this was his statement, made only a few days later, about the company’s three-year financial track record”. This was in a statement made to the stock exchange on 31 March 2014.
Mr Gibson said Your Legal Friend could “realistically” issue the letter of claim within the next couple of months. The claimants are being funded through a conditional fee agreement, backed by after-the-event insurance.
It was announced earlier this summer that Philip Marshall QC of Serle Court, who is acting for shareholders suing RBS and Tesco, has been appointed lead counsel for the potential group action.