Quindell plc has begun legal action against those it believes have co-ordinated a “shorting attack” on its shares, the alternative business structure announced this morning.
It comes in the wake of the publication earlier this week of what it described as a “highly defamatory” and “deliberately misrepresentative” research note on the company by little-known American company Gotham City Research (GCR).
Quindell’s share price, which was almost 40p at the start of the week, collapsed to 17p in the wake of the report before recovering a little to 23p, which is the level at which it continues to trade today.
In a statement issued to the London Stock Exchange this morning, AIM-listed Quindell said: “The board notes the short positions that were taken in the company’s shares prior to the publication by GCR and also the reference in the GCR report admitting to readers that they should ‘assume that, as of the publication date of the report, Gotham City Research LLC stands to profit in the event the issuer’s stock declines’.
“Legal action has already been initiated by the company against those responsible for what it believes to be a co-ordinated shorting attack and reports are also being made on this activity to the appropriate regulatory authorities.”
Quindell has issued a detailed response to the 74-page GCR report. Tony Bowers, senior independent director and vice-chairman of Quindell, said: “It is disappointing that my executive directors have been forced to spend time responding to these allegations…
“It is the intention of a number of the directors to purchase shares in Quindell once they receive clearance from the appropriate regulatory bodies. I have personally taken the time to ensure that the level of detail of our response meets the needs of all of the investors, including those with whom we have personally spoken.
“The board continues to target the company’s move to the main market, as stated previously, and is looking forward to our US investor roadshow next week. With trading at the start of the year being at record levels, the board remains confident for the prospects of the group.”