The law firm acting on behalf of hundreds of investors in Quindell has today issued its letter of claim over alleged misrepresentations made by the company.
Your Legal Friend – the consumer-facing brand of Liverpool firm Camps – has issued on behalf of an initial claimant group of 342 retail investors.
The claims of a further 800 investors are being assessed, with the number continuing to grow “each week”, the firm said.
The solicitors said the letter contended that Quindell – now renamed the Watchstone Group – “misled investors through a series of RNS [stock market] announcements and in its historical published accounts, culminating in the various disclosures, restatements and revisions overseen by the current board and contained in Quindell’s 2014 annual report and financial statements, which was released on 5 August 2015”.
The restatements turned Quindell’s 2013 profit after tax of £83m to a loss of £68m and reduce reported net assets from £668m to £446m at 31 December 2013.
They were announced on the same day as two investigations were launched into what happened before Quindell sold its legal business to Slater & Gordon, one by the Financial Reporting Council, the other by the Serious Fraud Office. The Financial Conduct Authority is already investigating.
Your Legal Friend said it was seeking answers from Watchstone about:
- Various issues that resulted in the qualification of KPMG’s audit report on the 2014 accounts;
- Statements made by the company in relation to various acquisitions;
- Revenue and profit representations linked to noise induced hearing loss cases;
- Representations linked to the proposed move from AIM to the main market; and
- The events of October and November 2014 which culminated in the departures of Robert Terry and certain other directors from the board.
This Wednesday Watchstone’s shares are to be suspended ahead of a court hearing on its plans to reduce its capital and return some of it to shareholders.
In response, Watchstone said: “Whilst the company is yet not in a position to verify the assertions in the letter of claim, consistent with the previous announcement of the company and correspondence from the law firm, the letter of claim details the expected value of the potential claims against the company to be approximately £9.4m.
“As stated previously, the company plans to vigorously defend all claims.
“The company does not believe that the letter of claim will adversely impact the company’s previously announced reduction of capital and return of capital.”